Monday, December 29, 2008

Ponzi: The Government's Favorite Scheme

The "Ponzi Scheme" is getting much attention with the arrest of Bernard Madoff. His fraud (alleged) is going to total billions of dollars. However, while it is illegal for an individual to run a scheme such as this, it is apparently the government's favorite financial tool. When one looks at things closely, the Frederal government is really operating a number of giant Ponzi schemes.

Before getting into detail, I copied this from Wikipedia to define what the scheme is:

"A Ponzi scheme is a fraudulent investment operation that pays returns to investors out of the money paid by subsequent investors rather than from profit. The term "Ponzi scheme" is used primarily in the United States, while other English-speaking countries do not distinguish colloquially between this scheme and other pyramid schemes.

The Ponzi scheme usually offers abnormally high short-term returns in order to entice new investors. The perpetuation of the high returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors in order to keep the scheme going.

The system is destined to collapse because the earnings, if any, are less than the payments. Usually, the scheme is interrupted by legal authorities before it collapses because a Ponzi scheme is suspected or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases."

I already wrote about the ruse that the Federal government call Social Security. This is nothing more than a glorified Ponzi scheme. (Read it here)

There seems to be a new system that is going to be structured in the same way. It is the proposed Universal Healthcare System. This is something that you all have heard about. The Federal Government is going to provide insurance for everyone who is not presently covered. This sounds wonderful until one asks "where is all the money going to come from?". The simple fact is that there will not be enough money coming in to cover the expenses that are going to need paying out. Of course, initially, the funds will be available. However, over the decades, we will see the deficit grow to cover this. This is no different than Social Security.

If we want to take this one step further, we can expand this to mean the entire Federal Government is nothing more than a Ponzi Scheme. The existence of this entire institution is based upon money taken in today. However, the services are paid out immediately with no future certainty that those services will be offered to those stuck with the future payments. This seems very similar to what MAdoff did.

Simply put, we are receiving the payouts today based upon the continual investment by others. Sooner or later, when the incoming money doesnt cover the expenditures, the system collapses. That is the present fate of the American government. This is an entity which will implode because of the excessive spending. Our children will not be able to pay enough to cover all the payouts presently promised by the existing leadership in this country. Hopefully, the American people will wake up to this ruse before it is too late.

Bernard Madoff is going to jail. However, he is not the only one who belongs there. Each of the individual Congress people, President, and anyone else who is involved with this illegal system of government should be there with him. They are willing participants in one of the greatest crimes mankind ever witnessed.

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