The Ponzi Scheme that Plans to Eat Your Retirement

Intro

The driving force behind those in Congress who want to “reform” Social Security and Medicare are investment bankers who make their money through ponzi schemes, unsound and often illegal business models in which a company’s paper assets are lies and new investment dollars are needed all the time to keep up the illusion of profitability in order to attract new investors. Now that the world’s wealthiest are onto their tricks, they have to find new suckers….uh hum…investors who are willing to pour all of their disposable income into the toilet. But since most folks have no disposable income due to the downturn in the economy, the banksters have thought of a brilliant scheme. Get the federal government to force folks to invest with them. You say it can't be done. Americans would balk? Read on.

Why Your Social Security and Medicare are so Attractive to Those Who Run Ponzi Schemes

One of the risks that ponzi owners face is a run on their company. Say word gets out that they are thieves. There is no way that their scheme of selling tulip bulbs will make you a 1000% return on your investment. You have been had. The first thing you will do is beat down their doors, trying to get back your money. The next thing you will do is tell all your friends to stay away from Ponzis-R-Us. The third thing you will do is hire an attorney or go to your elected official to get your pound of flesh. The businessmen who build houses made of cards run the risk of ending up like Jeffrey Skilling (incarcerated) or Ken Lay (dead). In a situation like this, the public may have plenty of money, but it no longer wants to invest in the ponzi.

Another risk to ponzi owners is that the public will no longer be able to invest. This is what is happening to the banksters right now. Because of the economic downturn (which they caused) and the lack of credit ( for which they are responsible), American employers are laying off workers and moving jobs overseas. People who do not have jobs do not have 401ks. They can not put something aside for a rainy day, when they are living in a hurricane. Even if they wanted to invest their pension funds in a bundle of worthless mortgages, they would not be able to do so. They have kids to feed.

Sensible business owners know that the solution is to get people back to work, so that they have disposable income once again. Then, they will make major purchases, which will create jobs for other American workers, which will increase the number of folks with pensions in need of investment. Sensible business owners know that workers need to be in good health in order to be productive, so they want to see everyone in this country get good, basic preventive healthcare. Sensible business owners are fed up to here with the high price of the insurance they must buy in order to keep their best employees, and they would much rather see the U.S. government use its collective bargaining power to take over the job for them.

However, for every smart, hardworking businessman or woman, there is another schemer who looks at the Enron executives who did not get caught, the ones who cashed out their chips and retired with huge fortunes, like Lou Lung Pai who walked away with $271 million, and he thinks That could be me. If only I could get my hands on a whole lot of somebody else’s money. The conman looks at the executives of J.P. Morgan and Goldman-Sachs, who not only avoided prosecution, they also got paid for being crooked, and he thinks Yeah. Investments. That’s the way to go.

But where is he going to find money to invest? Money that people will be willing to leave with him for years and years, so that he has plenty of time to rip them off and then flee the country before they even know that they have been swindled?

Ah yes! Retirement accounts. Medical savings accounts. Money that is deposited with an investor and which (chances are) will remain untouched for decades. Unfortunately, the average American does not have anything left over from his paycheck to put into one of these types of accounts. But wait! What if the federal government tells people You can either pay your Social Security taxes and we promise that when you reach retirement age, you will not see a penny of it. Or, you can invest your Social Security taxes with a private bank that promises to give you a 500% return on your investment? Where do you think 20 something Americans will invest their Social Security?

And what if the federal government tells Medicare recipients We will give you a $10,000 a year check and you can either give the whole thing (plus some extra out of your own pocket) for private health insurance that you will be unable to use due to its high deductibles. Or, you can put that $10,000 a year check into a medical savings account and keep your fingers crossed that you never get sick, in which case, you will have a nice little nest egg saved up by the time you reach 75.

These two plans---- private Social Security investments and medical savings accounts for Medicare recipients---are two of the ideas which the Cato Institute (read Koch Brothers, as in the family that makes its money driving up the price of oil) promotes. What is not to like about these schemes? In the first place, a bunch of financially naive Americans will suddenly have thousands of dollars each year to invest into whatever ponzi scheme catches their eye. And, if the government mandate for universal health insurance becomes a government mandate for universal medical savings accounts, then the money which the feds would have used to buy insurance for poor, working class Americans who are young and basically healthy will now be used to invest in the Enrons of tomorrow.

The Tea Baggers may think that they are writing laws to deny Blacks, Hispanics, Muslims and gays Social Security and health care so that whites, heterosexual Christians will have more. But, they are really being used to free up enormous sums of money for the Bernard Madoffs and Ken Lays of the future, who steal from all Americans equally, without regard to race, creed or sexual orientation.

And now, for those who think that ponzis are as rare as UFOs...


Postcript. A Not So Brief History of American Ponzi Schemes

Ponzi schemes have been around for a long time, and they are as American as apple pie. The principle is very, very simple. Real investments pay shareholders out of profits generated from capital which has been invested. A ponzi scheme pays investors out of the new capital which is acquired from new investors. For a ponzi scheme to continue, there must be lots of disposable income within the population and lots of suckers willing to turn that income over to strangers for a promise of huge returns. When an economy collapses and folks have no more disposable income, ponzi schemes go belly up---and sometimes their creators go to jail, as in the case of Charles Ponzi.

http://en.wikipedia.org/wiki/Charles_Ponzi

There are other, less famous (or infamous) ponzi schemes. In the 1920’s electricity mogul Samuel Insull had



http://www.nytimes.com/2006/03/19/business/yourmoney/19shelf.html

Before Charles Ponzi, there was William Millerwho



http://www.time.com/time/business/article/0,8599,1866680,00.html

After Ponzi, such schemes because less common in this country, because of federal financial regulation legislation passed during FDR’s administration. However, in the 1980s, the nation’s banksters began to look back at the “good old days” before the Great Depression, when they could get rich quick by defrauding investors. This lead to financial atrocities such as this:



http://articles.chicagotribune.com/1987-03-13/business/8701200159_1_home-mortgages-ponzi-scheme-firms

Despite sporadic prosecutions, ponzi schemes continued to increase in size and number. They key, according to those who ran them, was to create the image of a company or investment firm that was “too large to fail.” The more people who were swindled, the easier it was for the companies to maintain appearances. Which brings us to Enron, a company which has been compared to Charles Insull. In today’s energy hungry world, it is easy to convince investors that “energy” is a guaranteed growth industry. If you can get the government to deregulate utilities such as electricity and then find a way to manipulate prices using sleight of hand, there is theoretically no limit to the amount of money you can make. Which was why former Bush Army Secretary Thomas White, when asked how Enron would make up for losses, replied “California.”

http://www.commondreams.org/views05/0608-28.htm

Enron wiped out $60 billion in investments, including $2 billion in pensions. That is $2 billion that the nations teachers, firefighters and nurses would not be getting after they retired from years of public services.

And then there was Bernard Madoff.


http://en.wikipedia.org/wiki/Bernard_Madoff

I include this quote from Wiki, because I think it makes an important point. Those who create ponzi schemes are not the victims of circumstances. Theirs are not good investments gone bad. These folks know what they are doing, and, when their backs are pressed against the wall, they will attempt to squeeze every last bit of money from the organizations in order to enrich themselves and their friends and employees.

Recently, the nations banks took part in an enormous ponzi scheme, creating worthless paper assets and offering to let the unwary invest in them. To rub salt into the wound, the same banksters would turn around and bet that these investments would fail, generating a double revenue stream from the same scam.



http://www.dailykos.com/story/2008/04/01/488518/-Subprime-Mortgage-Ponzi-Scheme

- K&R

Enron wiped out $60 billion in investments, including $2 billion in pensions. That is $2 billion that the nations teachers, firefighters and nurses would not be getting after they retired from years of public services.

across the page. Very very strange.

This is precisely what is behind this.

And those who think that Social Security is not worth arguing about, please pay attention.

And then disappear quietly into the night.

than the ususal scam is that asset movement in these "investment" accounts is restricted. You can only "reallocate" among a restricted pool of funds roughly 4 times a year, and there is usually no "all cash" allocation available.

In short, this turns SS taxes into a large bloated corpse floating on the surface of the pond that all the scavengers can consume at leasure. Better yet, there are no guaranteed returns, so no one is responsible for the carnage. It is a perfect lose-lose scenario.

The punch line however is that at some point granny and grandpa will be on the streets. All the money to care for them will have been stolen, and the tax payer will be stuck picking up the tab, because bottom line we really aren't going to let granny starve even if she "invested" poorly.

The point of social insurance is to prevent this outcome by not allowing the scavengers access to the money.

My mother's mom was taken to the cleaners during the S&L collapse. I eventually got a small slice back through bankruptcy proceedings, ten years after she passed. This is what individual "investment" accounts are all about.

Experience.

The video "The Shock Doctrine" details the pertinent histories of three nations who were forced into the Milton Friedman "Free Market 'Capitalism' " that the World Wide Uber Elitist foisted on them. This current day, American "Debt-Crisis-To-Be-Solved by 'reforms to Social Security amd Medicare' has "Free Market Capitalism" written all over it.

In both Chile and Aregentina, it was necessary to have a junta-stled military and also to disappear the progressives.

In Russia, the mafia there held the real power. The numbers of the impoverished increased by 70% if not by even more. Eating became a luxury. Desperate people put their kids into fister care, where children died for lack of food as nurturing.

One of the two models above is where we are heading.

their money...to fatten their already fat asses (R).

You hit so many nails right on the head here you could build a house.

And media control and useful bigots and idiots have given the schemers so much confidence that they don't feel the need to try to hide in the shadows anymore. It just leaves us here to watch in helpless horror as everybody's future gets destroyed to enrich a few sociopaths.

a bunch of other billionaires. If it were just thousands of "little people", that fucker would still be living in the lap of luxury.