Ezra Klein is the twenty something leftwing hack who has never had a real job in the private sector beyond the lefty think tank and pundit shops in DC. Somehow or another he got a cushy gig pretending to be objective at the Washington Post where he continues to mouth off on economic policy from a decidedly left-wing bent.
It’s gotten so bad that Ezra Klein is forced to play word games and lie to win an argument on social security. Klein wants to win an argument against the Republicans on social security. So what does he do? He has to reinvent a new definition of ponzi scheme.
Klein relies on liberal blogger/polisci guy Jonathan Bernstein to give him his definition, which is to define a ponzi scheme as “a fraud that relies on new investors being unaware of the program’s financing mechanism.” And OH MY GOSH!!!!! social security is fully transparent therefore it cannot be a Ponzi scheme.
EZRA IS BETTER THAN WELL WHO CARES. HE WINS!!!!!
Except he only wins by willfully changing the definition of a ponzi scheme. I say willfully because he can’t be that stupid can he?
From the American Heritage Dictionary:
a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
From Webster’s Dictionary:
an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risk
From Wikipedia:
A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors.
And my personal favorite comes from the Securities and Exchange Commission:
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk.
Social security takes my money that I am forced to invest in the system and pays it to people who were forced into the system before me. The only major difference with a dictionary definition ponzi scheme is that the system is not designed to incentivize future risk on my part. But then it does not have to because I am forced into the program. And it sounds pretty damn close to the SEC definition of a ponzi scheme.
Ezra Klein can manipulate all the words he wants, but when you get to the actual definition of a ponzi scheme, social security sure as heck looks a lot like one.
By the way, exit point: it is still a ponzi scheme by Klein’s definition isn’t it? How many people really know that their social security is funded based on IOU’s? Don’t people think their social security money goes into a separate, segregated fund when it really is being used to fund the federal government? I betcha most are under that impression.
Moe Lane
Dan McLaughlin
Dan Spencer
Jeff Emanuel
Neil Stevens
If it wasn't a Ponzi scheme
jimmuy8 (Diary) Wednesday, August 31st at 9:30AM EDT (link)which pays current “investors” with money taken from new and future investors, then why did 0bama say he’d have to stop Social Security checks if he couldn’t borrow more money?
5
sbm1 Wednesday, August 31st at 10:17AM EDT (link)nt
Politifact...
neoavatara (Diary) Wednesday, August 31st at 9:40AM EDT (link)Politifact did a piece on this a few months ago. Basically, they ruled that Social Security fit every parameter but one for a Ponzi scheme: it did not INTEND TO DEFRAUD.
Thus, they ruled it was not a Ponzi scheme.
It is the same idiocy.
In every characterisitic important in the structure of a Ponzi scheme, Social Security fits to a ‘T’. Liberals simply cannot get their heads around the fact that their greatest accomplishment has so much in common with the greatest of financial frauds.
www.neoavatara.com/blog
Many Ponzi scheme's didn't "intend"
sbm1 Wednesday, August 31st at 10:22AM EDT (link)I’m even willing to give Bernie Madoff the benefit of the doubt that when he turned his legit investment fund into a Ponzi scheme he didn’t intend to defraud them….it snowballed into it, and once he got in he lacked the intestinal fortitude to own up and get out…..
Sort of like every politician for the last 30 years has done the same regarding Social Security…or European politicians regarding the Euro…
There was a recent Two and a Half Men where the Jon Cryer character starts a Ponzi scheme almost by accident, but then the admiration and trust that was associated with being the guy with the big returns really got to him….
I see more parellels to almost all government promises of largesse and a ponzi scheme than I do in most Ponzi schemes….
So once again, liberals
baserunr (Diary) Wednesday, August 31st at 12:34PM EDT (link)are eventually forced to admit that the unintended consequences of their ideas make everyone worse off. Social Security is a Ponzi scheme, whether or not the intent was to defraud. The obvious and logical result of their actions could be nothing but what we have today. And it gets even worse, or course. Social Security has the corrosive effect of supporting the erroneous belief that “it” will be there for you to retire on, so there is little that is done by the public en masse to save for retirement. Obamacare, if allow to stand, will have precisely the same results for the nations healthcare system that SS had for the retirement system. Another perfectly avoidable tragedy, the result of foreseeable but “unintended” consequences.
“The day you think you know it all is the day your trouble starts.”
Relying on Criminal Statutes
edintexas Thursday, September 1st at 7:50AM EDT (link)By maintaining that the governing factor is intent, Politifact is basing their decision on whether a criminal prosecution would clearly be successful. Criminal fraud statutes, like most criminal statutes, incorporate intent as an element of the crime.
What Politifact failed to consider is there are also civil fraud statutes. And civil fraud has a lower standard than criminal, specifically in the Federal statue the standard is “knew, or should have known” rather than the criminal “”did knowingly and willfully”. The exact terms vary a little (e.g. criminal is sometimes “did, with knowledge and intent”), but you get the idea.
I have been trying to publicize this fact: the Trust Fund is a Myth
YnotNOW (Diary) Wednesday, August 31st at 9:53AM EDT (link)and wrote a diary about this a while ago:
http://www.redstate.com/ynotnow/2011/04/04/the-myth-of-the-social-security-trust-fund/
Bottom line, to cash in the “trust fund,” Social Security must convert their IOU’s into cash to pay beneficiaries. This requires one of three:
– Pay from current tax receipts
– Borrow more money (issue new bonds)
– Print money
This is EXACTLY THE SAME as if there were no trust fund at all. Which illustrates that there really is no “Trust Fund.”
YnotNOW
If not me, who? If not now, when?
The trust fund is composed of "special issue" T-bills
JSobieski (Diary) Wednesday, August 31st at 10:19AM EDT (link)So option 4 would be to sell the T-bills. Those T-bills have already been issued.
http://www.ssa.gov/oact/progdata/specialissues.html
The question I have is:
Can a non-trust fund by a “special issue” t-bill? If not, you are correct that the trust fund consists of an illiquid asset that cannot be sold.
One of two things is likely true. Either a “special issue” t-bill loses its “speciality” when sold to a non-trust fund, OR it can’t be sold to a non-trust fund in which case it is non-marketable. A non-marketable security sounds even more criminal than the overarching ponzi scheme.
Are “special issue” t-bills marketable securities?
Did you know that China has been losing manufacturing jobs since 1995? For the specific data, see Table 1 in the following link: http://www.bls.gov/opub/mlr/2005/07/art2full.pdf
I remember looking into this during the debt ceiling debate
JSobieski (Diary) Wednesday, August 31st at 10:25AM EDT (link)“Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash. ”
http://www.ssa.gov/oact/progdata/fundFAQ.html#n7
The $2.6T in T-bills in the SS Trust Account is already part of the Federal Debt, so if the debt ceiling wasn’t raised, the trust fund would have been tapped to make SS payments.
Did you know that China has been losing manufacturing jobs since 1995? For the specific data, see Table 1 in the following link: http://www.bls.gov/opub/mlr/2005/07/art2full.pdf
"Special Issue T-Bills"
YnotNOW (Diary) Wednesday, August 31st at 10:32AM EDT (link)are just that – “special.” So they cannot be sold on the open market. Instead, they issue new T-bills. This is a technicality – the bottom line is that they need to be SOLD to someone who is willing to BUY – which means someone willing to lend them money.
“Redeemed at any time” means
– take taxpayer money
– borrow more money
– print money
No difference.
(You are correct that this is already included in most calculations of the National Debt – whereas the unfunded liability for future oblications of SS and Medicare/Medicaid are not)
YnotNOW
If not me, who? If not now, when?
There is a difference, but it is not a big one
JSobieski (Diary) Wednesday, August 31st at 10:40AM EDT (link)It seems to me that the “special-issue” aspect is a de minimis incremental advantage if the government gets to a point where it can’t pay its bills. However, there is a non de minimis distinction between an IOU and a t-bill.
An entity can pick and choose what IOUs it pays when it doesn’t have enough to pay all the bills. A t-bill is a negotiable instrument.
I would much rather purchase a t-bill from SS than a receivable from a government contractor.
Did you know that China has been losing manufacturing jobs since 1995? For the specific data, see Table 1 in the following link: http://www.bls.gov/opub/mlr/2005/07/art2full.pdf
OK, a slight difference
YnotNOW (Diary) Wednesday, August 31st at 10:45AM EDT (link)in that it is an IOU with legal backing.
Not much difference in how the government must come up with the money for the “redemption.”
YnotNOW
If not me, who? If not now, when?
not really
streiff (Diary) Wednesday, August 31st at 10:33AM EDT (link)the T bills owned by SS are not negotiable on the open market. They must be redeemed by the Treasury. So selling them, under current law, isn’t an option.
“What keeps me here is the reek of beer, the ladies and the craic”
So can we call it an Interest Only Mortgage?
sbm1 Wednesday, August 31st at 10:13AM EDT (link)because I think Ezra really liked those guys at Countrywide and such who gave their customers actuarial reports and such that said how they would have to finance these loans in the future….
“for the next 5 years you can put 12% of your salary into this, but to ever get any money out, expect that number to either rapidly go up to 20%, or for your payout to halve…..”
Between him and Yglesias I cannot figure out who is dumber, and if those are the pundits the left is bringing forth nowadays, I can’t imagine how bad left wing cable news programming will be in 20 years.
The problem is obvious
citizenjerry Wednesday, August 31st at 11:38AM EDT (link)“I say willfully because he can’t be that stupid can he?”
I sure hope that’s a rhetorical question.
Klein is worse than an idiot.
mdyou (Diary) Wednesday, August 31st at 12:06PM EDT (link)He’s a lib.
Intent and time matter...
actuarius (Diary) Wednesday, August 31st at 1:59PM EDT (link)Prior to government meddling in pensions, health insurance, life insurance, and disability, the working class of America and the UK addressed those needs by joining so-called “friendly societies.” Commercial insurance companies focused on business and well-to-do individuals. Every friendly society member paid into a fund. The benefits were paid out of that fund. The dues for each member were assessed pretty much as a pro-rata portion of what the officers felt would be necessary in aggregate for the next year.
Friendly societies suffered the same fate that is befalling Social Security. Their response was to change their funding approach. All now fund their obligations using the more equitable and financially sound legal reserve methodolgy, which collects expected costs over time and sets aside reserves in anticipation.
No one at friendly societies intended to defraud, but the funding approach they used was flawed. When it became clear, they started using alternative approaches.
Social Security funds their obligations using the same approach as used previously by friendly societies. But, since SS is part of the government, they act impervious to Joseph Schumpeter’s creative destruction. The government just keeps pouring more of our money into a flawed funding mechanism, making the situation worse with each passing year.
It has been clear for some time (at least forty years) that the SS funding mechanism is inequitable and inadequate under certain circumstances, and that those circumstances were coming in the form of the Baby Boomer wave. The significant changes made in benefits and funding levels in the mid-1980s were meant to address the wave, but they were only band-aids that left the basic problem in place: the funding mechanism itself. Given that everyone has known for many years the nature of the problem, and given that we have failed to address the fundamental issue, I’d say it is fair to call it a Ponzi scheme. (even if it wasn’t fair to call it such at an earlier time)
De-fund, repeal, and replace the abomination that is ObamaCare.
Responding to Your Question
travis690 (Diary) Thursday, September 1st at 5:17PM EDT (link)Since you asked if Ezra Klein is really so stupid…I can only answer, YES!
Anyone who has to change definitions of wards cannot claim any intellectual quality on any issue. That is a slippery slope that originates from extreme hyperbole and straw-man arguments. When you are presented with evidence, you change the words to suit your claim of innocence.
May I remind you of the ten most dishonest words ever spoken:
“That all depends upon what the definition of ‘is’ is.”
Cartier on sale
fashinefa Friday, September 2nd at 6:05AM EDT (link)Good things always make people so like, could not help but want to have it
Cartier on sale
I’m a ghost.