imotion s14

Enron was brought down by an accounting scandal where they were able to hide liabilities with shell companies off balance sheets.

Bernie Madoff was caught running a ponzi scheme where he took money from initial investors and gave them to new investors.

All these things are illegal.

Yet the Government is able to hide it's liabilities by simply saying that they aren't part of the budget. They're liable for the trillions of unfuned entitlements but because they aren't subject to accounting regulations they force on the private sector (to protect the consumer of course), they are able to keep it off their own books...

Which brings me to the mother of all ponzi schemes. Social Security. We're at the point in SS where Bernie Madoff got exposed. SS is pay out more than it takes in. But unlike Bernie, we're forced to pay for this Ponzi scheme.

Yet the government wants to regulate the economy more, but never wants to regulate itself.

Chris Dodd is leading the call for financial regulation.. the same guy who couldn't see the bubble is the guy who will save us all.



Good grief.

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ronmcdon

optimally it would be best to rid ss entirely.

could be worse though.
ss taxes could be increased to offset the balance.
that's not unplausible given the current state of politcs

kingkilburn

SS was fine until the Executive Office started borrowing against it. At that point more was being payed out than in. That with the fact that there are so many getting SS now compared to the number paying in is why it isn't working.

The system can work but not when it is messed with and borrowed against.

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imotion s14

It can never work, it's mathematically impossible.

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kingkilburn

It worked just fine until Reagan used SS funds to build up the military and pay Gov. contractors. That set a precedent and now the Feds pull money out of it all the time.


I do agree that the government should(as the law already requires) have open accounting books.

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imotion s14

that's mathematically impossible. Not only that but withholding all that money from the economy also keeps the economy from any meaningful growth. Capitalism doesn't work if you don't have capital and capital comes from savings and investment.

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kingkilburn

You can call it impossible all day but that fact remains that it did work.

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imotion s14

so "did" the Soviet Union. If by work you mean eventually collapse under it's own weight.

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kingkilburn

You are a fool. You should do some actual research on SS before Reagan. It worked extremely well.

SS is not collapsing under it's own weight. It has been warped into us paying for our grand parents because their money was robbed from them.

What needs to happen is the Feds paying back what they took. Then it is no longer a ponzi scheme. It goes back to every dollar coming back with interest.

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TheWolf

Listen just because the gov't is using one programs income to "purchase" treasury bonds from another programs debt and use those ultra low economy stimulating rates to generate some pittance of a return and stimulate someone elses business. Doesn't mean it's a ponzi scheme.

Just means that they're using creative accounting for the left hand to purchase debt from the right hand with the promise that the right hand will pay it back although the right hand has never paid a dollar back since 1950 but has made all his interest payments on time. The right hand also owes practically everybody including the muslims and chinese. Eventually one day though he's gonna spend more than he can cover and someone is going to cut him off which leaves only the left hand free to hold the bag.

IF you're under 30. There's a good chance SS will not be viable for you and medicare is going to turn into a VA style care center. You'll get the care you need. Eventually. When both parties could not come up with the essential money for the extension of unemployment benifits, it showed that neither side has any interest in solving any fiscal solvency issue.

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kingkilburn

Sorry I'm with imotion on this one. SS is being run as a ponzi scheme right now. Every time I pay into it I'm really just paying for the current payee and because these amounts aren't even at some point they wont have enough money to pay out. That is why they need to payback what they took in-full.

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imotion s14

Old debt is rolled over with new debt as the new debt is used to cover the interest of the old debt when they mature.

You're right it's accounting slight of hand, which is what the purpose of this discussion is about. The government holds the private sector up to very strict standards when it comes to accounting. Yet this same stringent accounting scrutiny is NEVER applied to government. The Government never gets "regulated" their mistakes are rewarded with more power, more money, more resources.

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