Charles Ponzi: Unsung National Hero?

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Some time ago I visited the Social Security Website just to see what was going on in their little socialistic heads, and came across an "explanation" of how Social Security was Not a "Ponzi Scheme," embellished with some of the most convoluted govspeak one could ever imagine.

It seemed to be written by a true believer. But as I read it again and again I was impressed with how they were inadvertently making the case for the opposition. The more I read it, the more I wanted every American to read it — and think about it. I shared it with a few friends and they all agreed. The Social Security Administration was exposing itself as a Ponzi Scheme — albeit a really Huge Ponzi Scheme. At the bottom their "explanation" proved nothing more than that their Ponzi Scheme was quite legit simply because it had the sanction of government.

The government robs Peter to pay Paul to sustain social security. This is not really disputed. It is just euphemized ad nauseum. Lawfully speaking you give them written permission to rob you to pay Paul. Of course you are not allowed to do anything like robbing Peter on your own behalf, because that would be a crime. But Socialism is a criminal system of economics. The sanction of government does not render a crime victimless or without culpability. It can sometimes mask the crime and delay the results. But sooner or later the day it's Judgment Day!

Once again we refer to Bastiat:

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law — which may be an isolated case — is not abolished immediately, it will spread, multiply, and develop into a system [Social Security is a government Institution but that cannot make it Lawful]. — From The Law by Frédéric Bastiat

    Click on the Poster to see it in a larger size at the SSA site.    

The reason this article is not a letter addressed to the Social Security Administration is that I have learned it is fruitless to engage them in dialog if you are hoping to come to a lawful, helpful, or logical solution. They cannot "afford" to listen. Their job is to keep track of eligibility, payments and benefits, and to make sure the government's extra-constitutional socialism machine is on track. They need to have more and more money to give away and more and more beneficiaries to "help" — and their job security and cushy retirements depend on it. They don't get on the phone to the Congress and ask questions about government ethics, the Constitution, or fiat money.

I would not hesitate to challenge them to put that same "explanation" verbatim back up on the Web for all to see.

Could it be the entire project was covertly done by a disgruntled SSA employee who wanted to expose the fraud? Do we have a man on the inside? I am more inclined to believe some underling, a budding young socialist, perhaps an intern, had labored long hours on his/her own time in an effort to proudly glorify the Agency and its noble mission. Then a senior management gatekeeper read the piece and immediately had it deleted. Suddenly the piece vanished. We must not confuse the customers. Note: If anyone has a copy of that piece I would appreciate an email.

The above scenario is pure speculation. But I am sure I would be equally entertained by any new effort they might mount to explain how silly we are to question their alchemy. Just how do they expect to keep it going? Will it work when one worker carries twelve retirees on his back? What happens when our life expectancy increases dramatically?

Ponzi was a Piker. He stole a lousy 15 million bucks. And he couldn't sustain his scam because he didn't have access to an inflatable money supply or the force of government arms coupled with taxing powers. The "Full Faith and Credit of the United States" is no longer dependent on anything tangible. It is only limited by the amount of time it will take the government to bankrupt everyone — and they are proceeding apace. As they print ever more paper money the effects of the silent but deadly inflation tax continue to devalue all goods, services and savings — except for their arch enemies: Gold and Silver — and those who have socked away enough of these precious metals not to be codependent with government. Inflation may already be decreasing Social Security benefits by as much as 20% per year. When they pay you later it will be with cheaper dollars — perhaps close to worthless dollars.

    Click on the Photo to learn more about Charles Ponzi.    

Ponzi Scheme in Wikipedia:

The eponymous scheme was orchestrated by Charles Ponzi, who went from anonymity to being a well-known Boston millionaire in six months using such a scheme in 1920. Profits were supposed to come from exchanging international postal reply coupons. He promised 50% interest (return) on investments in 45 days or "double your money" in 90 days. About 40,000 people invested about $15 million all together; in the end, only a third of that money was returned to them.

Ponzi's empire began to crumble when faith in his "system" was broken by a few who began to question it. Upon closer investigation by Clarence Barron the house of cards collapsed and Ponzi went to jail. His career was not over yet. After spending a little time in jail he went on to perpetrate various frauds in other States and countries.

Both schemes are confidence games. But this time you are the Mark.

When Americans understand the true impact of our shifting demographic combined with the inherent fraud of social security and fiat money, this ruse should be scheduled for decommissioning. In any case, gravity will sooner or later take its course. We are witnessing a giant game of musical chairs — and the chairs are being pulled away faster and faster. Social Security may be the quintessential Third Rail. Political animals may refrain from touching it. But that will not keep the money from running out. Empire building abroad and Socialism at home can really cut into your ability to set aside funds for the future. When in Rome buy gold.

How could the Founders and Framers of our Constitution have been so short-sighted in not providing for all our retirement benefits? Why, there is not a single word on it in the Constitution or the Federalist Papers. Maybe the Anti-Federalists mentioned it? How could they have been so uniformly financially inept that they didn't even realize how desperately we needed income taxes, paper money and standing armies?

“I sincerely believe… that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.” — Thomas Jefferson to John Taylor, 1816. ME 15:23

The government of the United States, does not, has never had, any authority to take property from one citizen and give it to another who has not lawfully earned it. And, believe it or not, FDR, in his own words, affirmed that. Later, he tried to circumvent the Constitution to birth the modern Welfare State.

In all fairness perhaps the Ponzi family should have been given reparations or at least royalties. But in the final analysis we should not be calling any government program a Ponzi Scheme. Government dwarfs all contenders when it comes to robbing Peter to pay Paul — after taking out a small cut of course.

The Congress has its own retirement plan. What do they know that you don't know?

The biggest crimes are and should be called Government Crimes not Ponzi Schemes. We must not sully his memory by comparing Ponzi's petty crimes with the Grand Thefts of our Elected Representatives. Ponzi has stolen his millions and government its trillions. Compared to the Congress Ponzi seems almost noble.

"The law doth punish man or woman who steals the goose from off the common, but lets the greater Felon loose that steals the common from the goose." — Anonymous circa 1600

Let's give credit where credit is due.

I cannot presently prove that the article I remember was ever on the SSA website. But I can prove that they are not giving Ponzi any proper credit in their present revision of SSA.gov. Click here to Search SSA for "Ponzi": Ponzi is nowhere to be found.

Update: Thanks to several astute readers who helped locate the article from the Social Security Administration mentioned above.

February 22, 2008