Bernie Madoff V.S. Social Security

[dan wong]

Anybody see a parallel between Madoff scheme and social security ?
The later investor paying for the earlier investor.

[acmanko]

I don't see a parallel with SS, However I do see a connection between his trading and the wild 500-600 point swings in the DJIA. Before its over he(Madoff) could be the catalyst for the massive losses in all MF's and retirement Plans.

I've spent some time scheming how I could manipulate the market If I had billions to play with daily

[acmanko]

Anybody see a parallel between Madoff scheme and social security ?
The later investor paying for the earlier investor.the later investor does not pay for the earlier. I've been paying into SS since 1968, probably longer than you've been alive.

[dan wong]

the later investor does not pay for the earlier. I've been paying into SS since 1968, probably longer than you've been alive.


We are probably the same age.

It is my understanding while the older generation drawing out their retirement fund, new generation is Replenishing the fund coffer. Am I correct? (Supposed to be a retirement account). However, I hear from some financial wizard, Social security is being diverted to fund other project (so I hear from the wizard). Assuming that is true, then that’s the same as taking one fund paying the other. Am I correct? Further, some analysis think social security will dry up by the time you and I retire. (Scary).

[acmanko]

We are probably the same age.

It is my understanding while the older generation drawing out their retirement fund, new generation is Replenishing the fund coffer. Am I correct? (Supposed to be a retirement account). However, I hear from some financial wizard, Social security is being diverted to fund other project (so I hear from the wizard). Assuming that is true, then that’s the same as taking one fund paying the other. Am I correct? Further, some analysis think social security will dry up by the time you and I retire. (Scary).
no, one fund paying another is what happens when the director of the fund is promising higher returns on the initial investment, which is not the case with SS. although you are shown the possibility of a return with SS, there is no guarantee, unless you live long enough.

[WhoIsThat?]

". . .provided benefits to retirees and the unemployed, and a lump-sum benefit at death.
Payments to current retirees were (and continue to be) financed by a payroll tax on current workers' wages, half directly as a payroll tax and half paid by the employer.
The act also allocated money to states to provide assistance to aged individuals (Title I), for unemployment insurance (Titles III), Aid to Families with Dependent Children (Title IV), Maternal and Child Welfare (Title V), public health services (Title VI), and the blind (Title X).[11]"

Mortality tables
http://www.cdc.gov/nchs/data/statab/lewk3_2003.pdf
predict how many people will die each year (unlike Madoff's investors, who continue to live), and other data predicts how many people enter the workforce each year (add 20 years to the birth rate), and how long they will stay.
There is a problem if people don't die 20 years after they retire at 65, and a problem if new people don't enter the workforce (birth rate too low).

When you figure in interest on money, inflation, etc., it gets to be a pretty complicated spreadsheet, very sensitive to small changes in any of the inputs and sensitive to predictions about future inflation, interest on money, etc..

It's likely some of the money in the SS fund gets siphoned off to pay for mistresses, most of whom have expensive tastes.
The larger amount of money, the easier it is to hide theft and fraud in among the ordinary waste that goes with a project this large.

If the amount of money in the fund is the DC voltage on a capacitor, the DC current charging the cap is the new people paying in, and the DC current discharging the cap is the people collecting, until they die off and are replaced by new retirees.
If the voltage on the cap goes negative, the SS fund is bankrupt. Even bad people don't want this to happen, because then there might be unwelcome attention drawn to the whole process.

[dan wong]

Let me rephrase my question.

Given the current spending habit, funding varieous programs, couple with current (un)employment problem (jobs gone to other country). Do you think there is Social Security fund avaible in 5 years?

Whats your prediction?

[WhoIsThat?]

Do you think there is Social Security fund avaible in 5 years?


Yes?
http://www.google.com/search?hl=en&q=bankrupt+%22social+security%22
and there's a 9% chance that I "won't be available" 5 years from now.:)

[tunnel_rat]

There's no "SS fund" now. If the gov wants to give you some petty cash, they'll take it from somewhere.

Only difference between Madoff and SS is Madoff's suckers gave voluntarily.:mad:

[dan wong]

There's no "SS fund" now. If the gov wants to give you some petty cash, they'll take it from somewhere.

Only difference between Madoff and SS is Madoffs's suckers gave voluntarily.:mad:

Thats more or less what them financial wizard tell me. So you do see a parallel, in the end, Proof, no money for the investor.

[acmanko]

The SS fund grows when a Dem is in Office but disappears when the GOP and their deficit spending comes into power. Recent history proves this, Under Reagan and Bush the SS fund was being depleted by the spendthrifts. Clinton restored it and now Bush Jr has spent away all your begottens future. the way to fix it is to have more children , so they can work when you cant

[tunnel_rat]

The SS fund grows when a Dem is in Office but disappears when the GOP and their deficit spending comes into power.




:D:D:D...Now THAT'S a good one......LMAO

Thx for that!!!:D

Simple minds need simple answers I suppose.....

[acmanko]

:D:D:D...Now THAT'S a good one......LMAO

Thx for that!!!:D

Simple minds need simple answers I suppose.....That is exactly why I directed it towards the GOP, who have been in power since Newt's Contract for America turned us from a democracy to a socialist conservative State.

[glennac]

I don't see a parallel with SS, ............

The question is can you see? If you can't see that the SS system has been a gaint ponzi scheme since day one then you are as blind as a bat.

The first ones on the system paid for just a year or two before they retired and had it made for life and now every year we are getting less and less return for all the money we put in.

[dan wong]

Tunnel rat and Glenn,
I am glad you two come out with your comment. I see it as a variation of a ponzi scheme (actually very good in theory, if the goverment didn't divert the fund, it should work, but the goverment mess with it - screwed it up)

[acmanko]

ponzi scheme's promise hugh returns. SS is just a promise to keep a roof over your head and a little food for your stomach, after you lose all your worth gambling on investments or some itty bitty 2 bit business that will not be worth the dirt you are buried in after you die,