There’s been recent debate from folks like Jim Cramer and Business Week on whether Social Security is a Ponzi Scheme. Of course, it is!

• You don’t have your own account that holds the deposits you make.
• The money you put in now is used to pay off people who joined earlier.
• The number of people in the scheme must keep growing to pay off current needs.
• The “bubble” pops when we can’t find enough new people to put money in.

Charles Ponzi would be proud of folks like Uncle Sam and Bernard Madoff.  Ony we’re not talking about $50 billion, like Madoff’s scheme.  Guess how much of Social Security is unfunded– meaning that we don’t have the money to pay it off?  $4.3 trillion dollars according to the Social Security Administration themselves.  A trillion is a million million, if you can imagine that.

But unlike a regular Ponzi scheme, this is one that most of us are aware of, but think we can pass off to future generations– we have urgent things we need to spend money on now.  And we can reduce the burden by raising taxes, cutting the benefit amounts, and raising the minimum age to collect.  I personally think that Social Security should go back to what it was originally created for– as a safety net for folks who don’t have a safety net.

It was borne out the FDR era, where soldiers coming back from war were not guaranteed a job.  So instead of spending 20 years accumulating a pension at one company, you could move around and take a retirement with you.  But like car insurance, health insurance, or welfare– social security should pay out only when someone desperately needs it.  I know a lot of wealthy people who are collecting these checks– and they claim to deserve it, since they paid in.

But if social security were truly a safety net, instead of giving out cash, it would give vouchers for rent, food, and have welfare-like restrictions on it.  You want to talk about supply side (trickle down) economics?   Your hard-earned tax dollars are not being used to create jobs or build businesses– unless you count the lollipops and golf outings that Grandpa is spending your money on.

Time to halt this Ponzi scheme, which will, in turn, give each us more of our paychecks back.  And then we won’t need the social security, except for those folks that need the safety net.