I'm continuing to try to understand how to articulate the difference between a Ponzi scheme and Social Security. My basic conclusion is that a Ponzi scheme has a criminal who steals money, whereas Social Security does not. Secondarily, Ponzi schemes are supposed to depend on a geometrically increasing progression of victims, whereas Social Security does not.
Typical Ponzi schemes blow up rather quickly, and this short time span is often said to be the hallmark of a Ponzi scheme. See, for example, this: http://www.socialsecurity.gov/history/ponzi.htm, where the author states that the problem with such schemes "is that it is difficult to sustain this game very long because to continue paying the promised profits to early investors you need an ever-larger pool of later investors. The idea behind this type of swindle is that the con-man collects his money from his second or third round of investors and then beats it out of town before anyone else comes around to collect. These schemes typically only last weeks, or months at most." However, Madoff's scheme went on for decades --- the government thinks it went on for perhaps 30 years or more --- and by Madoff's admission, it started in the early 1990s. How did he achieve this if he was running a Ponzi scheme? I realize that the power of a geometrical progression can certainly alter things, but I haven't found anybody who has yet commented on this seeming contradiction. Was Madoff simply very "conservative" in his desire or ability to add new victims? Did he siphon very little from their accounts? Bill _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
