The Ponzi Scheme Essay: What Is Social Security?

What is social security? According to the US social security booklet “ Understanding the benefits” published in 2016, social security helps retired, disabled, and families in which spouse or parents die. Currently, about 168 million working people pay social security taxes which are used to help 60 million people. Social security taxes paid by people aren’t held in their personal account so they can receive benefits later, rather it’s given to people currently in need of help. And remaining are put into a social security trust.
Many economists find serious flaws with this approach. According to the critics, the government can’t handle this, and it shall be privatized. We will look at different aspects of this claim below in detail.
Question 1
Currently, the social security trust is in a surplus of $2.8 trillion. However, it will deplete itself in 2035. Around 1938 system will be going in debt, if left in the current situation. The main cause of this is the changing demographics of America. In 1950 when this scheme was relatively new, more than 5 workers were present to support one
It was named after Charles Ponzi in 1919 who was the first person guilty of this charge. What is a Ponzi scheme? Ponzi scheme works on the principle that payments to old investors are being made by income generated by new investors. The person orchestrating the scheme isn’t investing money somewhere rather just re-distributing the wealth from new investors to old investors. Ponzi schemes generally show abnormal returns with no actual growth. It continues to work as long as the new investors are coming. Ponzi scheme will fail when people demanding return would increase by people investing money. Critics claim that social security works in a similar manner it takes money from current working people and pays to old generation (Old investors). It will eventually fail when the old investors increase by new