Waiting for the Mother of All Ponzi Schemes to Implode

It seems that Bernard Madoff managed to pull of an amazing scam over the last forty years that cost his investors $50,000,000,000. Unless "the government" - that's you if you pay taxes - steps in to restore the funds, a huge number of wealthy folks, charities, universities, assorted non-profits, and other organizations will go bust or near bust. Fifty billion is a really big number and forty years is a long time. I find it hard to believe that a scam of this magnitude and duration could be pulled off without inside knowledge on the part of more than one or two people. Victor Davis Hanson has a bit to say about it here.



The Madoff scam is big news today. It was a classic Ponzi scheme, a fraudulent investment scam that paid profits to its current investors out of funds invested by future contributors. By its very nature, the Ponzi scheme is destined to go broke because the number of new investors cannot grow fast enough to pay the profits required for the earlier investors. This definition should sound vaguely familiar to American citizens because most of them send part of every pay check to the biggest Ponzi administrator of all. It's called the Social Security Administration. SSA doesn't invest your money. Instead, they give your money to current recipients and promise you that you'll get yours, with appropriate cost of living adjustments, when you retire. The only problem here is the 76 million Baby Boomers who started retiring and collecting their social security benefits this year. Their benefits are generated by an ever-shrinking pool of workers. The pool is expected to shrink for decades. So who is going to pay these workers when it's their turn to collect? Bernard Madoff's investors found out the hard way. Don't let this happen to you, my friends. Take careful responsibility for your future. If you plan on using the SSA as your retirement plan, you will be in for a big surprise when the biggest Ponzi scheme of all makes for dire headlines. Bernard Madoff's $50,000,000,000 will look like small change.