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Investorman

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Re: fung_derf post# 326671

Monday, 04/04/2011 12:57:02 PM

Monday, April 04, 2011 12:57:02 PM

Post# of 358439
A Ponzi scheme is where you pay old investors with the money new investors are putting into the fund. That is what Social Security does. The people drawing Social Security now are being paid with money that new investors (current workers) are putting into the fund.

Like all Ponzi schemes, the SS fund now doesn't have enough new investors to cover the money needed to pay out to old investors due to a shortage of new investors. A pyramid scheme is very similiar but is based on sales revenue instead of invested funds.
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