At 71 years of age, Bernie Madoff was sentenced to 150 years in federal prison, the sort of term usually reserved for traitors, terrorists and extraordinarily violent criminals. By our count, that puts him back on the streets when he turns 221. To a person unfamiliar with the particulars of the Ponzi Scheme master’s incredible bilking, and looking only at the judgment, it would seem he must have perpetrated an incredible evil on humanity.
Evil? Yes. Creative? Possibly. Unique? No. The mechanics of the strategy could have been lifted directly from the United States government’s method of handling the Social Security system. We’re not joking. Madoff only juggled books for a few thousand investors to the tune of $65 billion, while the federal government is messing with millions of people and hundreds of billions of dollars. Let’s look at the similarities.
Bernie Madoff
Mr. Madoff talked people into giving him their money, claiming he would invest it for them. Most of it he kept for himself, paying out only what was necessary to keep investors on the line. As he continued to take new money in, he used that to pay older investors, all the while creating an incredible personal fortune for himself. Hopefully, we don’t have to point out that this is blatantly illegal and unethical.
Social Security
Despite Al Gore’s claim back in the day that there was a Social Security “lock box” into which tax money was depsoited nothing could be further from the truth. That makes Al Gore not only a pervert but a big, fat liar as well. The government essentially operates a massive Ponzi Scheme, wherein they use taxes collected from workers today to pay benefits to those who have retired. Where will the money come to pay today’s workers when they retire in a few decades? Umm, good question. By that time, Social Security will either be nothing more than a bit of American history or unrecognizable in form and will certainly bear no resemblance to what was promised.
So we put Bernie Madoff in prison for running a baby Ponzi operation. What are we going to do with our politicians? The two schemes are identical. Madoff only got about 15 years of easy living from his, while the government is going on 70 years of Social Security. Uncle Sam’s operative might not receive legitimate prison time, like they deserve but, as all Ponzi Scheme’s do, it’s going to unravel hard and fast some day.
Don’t bet your future on Social Security.
The Creating Wealth Team
Flickr / Infrogmation
