Even a blind squirrel...
12-31-2008, 07:33 AM
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Even a blind squirrel...
Cramer: Social Security a Bigger Ponzi Scheme than Madoff's
CNBC's 'Mad Money' host says federal entitlement program operates in the same manner as Madoff's scam.
By Jeff Poor
Business & Media Institute
12/18/2008 9:21:07 AM
Love him or hate him, this time Jim Cramer makes a good point.
While some in the media have expressed fury over allegations that Bernard Madoff ran a Ponzi scheme that may have cost investors up to $50 billion, CNBC’s “Mad Money” host Jim Cramer made another point.
“To everybody in the press, who’s calling Bernie Madoff’s alleged $50 billion scam the ‘largest Ponzi scheme ever,’ I say give me a break,” Cramer said on his Dec. 17 show.
According to Cramer, the largest Ponzi scheme in history is run by the federal government – Social Security.
“We know the truth about Ponzi schemes,” Cramer said. “We all know the name of the biggest Ponzi scheme in history and it’s not even illegal. In fact, it is run by the U.S. government. And the name of it – well they call it Social Security.”
According to the 2007 Social Security trustees report, Social Security is projected to bring in $827 billion in income for 2008 and payout $617 billion in costs, leaving it with $2.4 trillion in assets by the end of the year. However, costs are outpacing income and some predict the fund will be insolvent – as soon as 2016 if the amount of Social Security assets held in Treasury bonds is discounted.Cramer cited predictions that the program could be insolvent by 2042.
Nonetheless, Cramer noted the similarities in the mandatory payroll tax with the definition of a Ponzi scheme.
“In a Ponzi scheme, investors get the returns from the money paid in by subsequent investors and eventually the whole thing falls apart. The last people to invest get hosed. In Social Security, a program I love, workers pay for the benefits of current retirees and hope someday future workers will pay for their benefits – it’s all a Ponzi scheme.”
CNBC's 'Mad Money' host says federal entitlement program operates in the same manner as Madoff's scam.
By Jeff Poor
Business & Media Institute
12/18/2008 9:21:07 AM
Love him or hate him, this time Jim Cramer makes a good point.
While some in the media have expressed fury over allegations that Bernard Madoff ran a Ponzi scheme that may have cost investors up to $50 billion, CNBC’s “Mad Money” host Jim Cramer made another point.
“To everybody in the press, who’s calling Bernie Madoff’s alleged $50 billion scam the ‘largest Ponzi scheme ever,’ I say give me a break,” Cramer said on his Dec. 17 show.
According to Cramer, the largest Ponzi scheme in history is run by the federal government – Social Security.
“We know the truth about Ponzi schemes,” Cramer said. “We all know the name of the biggest Ponzi scheme in history and it’s not even illegal. In fact, it is run by the U.S. government. And the name of it – well they call it Social Security.”
According to the 2007 Social Security trustees report, Social Security is projected to bring in $827 billion in income for 2008 and payout $617 billion in costs, leaving it with $2.4 trillion in assets by the end of the year. However, costs are outpacing income and some predict the fund will be insolvent – as soon as 2016 if the amount of Social Security assets held in Treasury bonds is discounted.Cramer cited predictions that the program could be insolvent by 2042.
Nonetheless, Cramer noted the similarities in the mandatory payroll tax with the definition of a Ponzi scheme.
“In a Ponzi scheme, investors get the returns from the money paid in by subsequent investors and eventually the whole thing falls apart. The last people to invest get hosed. In Social Security, a program I love, workers pay for the benefits of current retirees and hope someday future workers will pay for their benefits – it’s all a Ponzi scheme.”
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