Fox News’ Jonathan Hoenig Calls Social Security A Ponzi Scheme, Network Runs Disclaimer

[pinboy3niner]

Fox News’ Jonathan Hoenig Calls Social Security A Ponzi Scheme, Network Runs Disclaimer
Frances Martel | 4:48 pm, May 29th, 2010

This morning on the business show The Cost of Freedom, guest Jonathan Hoenig argued that the Social Security program was “a Ponzi scheme.” He didn’t get too much support from the other guests, and as soon as he said it, Fox News ran a disclaimer that the opinions expressed on Fox News are not those of the network.

Hoenig, who was representing a website called “CapitalistPig.com,” argued that private citizens go to jail for putting programs together like Social Security, and that reform was not enough– the administration must be abolished:

“Social Security is, by definition, a Ponzi scheme. It is Bernie Madoff on the largest scale. They lock you up for things like this. There is no savings, there is no investment, there is no ownership, there is no account with your name on it. They’re just looting you today with the promise that they’re going to loot future generations on your behalf.”

And as he says this, a disclaimer scrolls on the bottom of the page stating: “The following program contains the strong opinions of its participants, which are not a reflection of the opinions of Fox News and should not be relied upon as investment advice when making personal investment decisions.”– a standard on business programming. But the topic at hand wasn’t exactly the stock market although it is a business program– it was quite a political conversation– and a quick look at Hoenig’s previous appearances on The Cost of Freedom’s “Cashin’ In” segment, which he is regularly a guest on,


Read More (w/video):
http://www.mediaite.com/tv/fox-news-jonathan-hoenig-calls-social-security-a-ponzi-scheme-network-runs-disclaimer/

[mainer]

1. In one sense, he's right

Current Social Security beneficiaries are getting their checks thanks to today's wage earners. And today's wage earners (hopefully) will get their retirement benefits from future wage earners. It's more an intergenerational agreement than an actual investment.

[WinkyDink]

2. So now investments with the Federal Govt are the same as a criminal Ponzi scheme?

[FarCenter]

9. Pretty much

[Statistical]

23. That is the thing there is no investment.

You pay into the system and that money is used to pay current retirees.

You pay in with the hopes than some future suckers will pay into the system and you will receive benefits.
That generations pays in hoping some future future generation will pay them out.
That generations pays in hoping some future future future generation will pay them out.
etc.

It is by the classic definition a ponzi scheme.

Now the US govt has deep pockets and they can force everyone to stay in. Usually what brings down a ponzi scheme is people demand their money back or the scheme can't attract new "investors".

[girl gone mad]

16. He isn't right in any sense.

People have to stop talking about the Federal budget as if it's a household budget. It doesn't work that way. Paying out SS to seniors isn't taking anything away from younger generations.

Sorry, but it's a huge pet peeve of mine when people with absolutely no grasp of monetary and fiscal theory weigh in with the usual naive zero sum nonsense.

[mainer]

21. "In any sense"? Have you looked at the definition of Ponzi Scheme?

You might want to look it up.

[girl gone mad]

25. I know what a Ponzi scheme is. I also know how monetary systems function.

Apparently, the latter is where you and I part ways.

[unblock]

27. if you check it yourself, i'm sure you'll find the word "fraudulent" features prominently in it

there's nothing fraudulent about the basic functioning of the social security system and the idea of current workers supporting retirees via a payroll tax.

nor is there generally any investment in the basic functioning of the social security system. only because of some demographic predictions did they decide to address an expected future shortfall by increasing the taxes and reducing the benefits, thereby creating a surplus which was "invested" in treasuries, so that it could be drawn down later. but that's not the core purpose of the system, that's just one method of managing a temporary demographic shift.


so, sure, it's just like a ponzi scheme if you ignore the fact that a ponzi scheme is a type of fraudulent investment and social security is neither fraudulent nor an investment.

[mainer]

29. You said it isn't analogous in ANY SENSE

I point out below some of the ways that it resembles one based on several characteristics. I didn't say it WAS a Ponzi scheme.

[unblock]

32. well if that's what you're going after, then your argument sheds more heat than light.

note, by the way, that *i* didn't say "in any sense", that was "girl gone mad".

in any event, the entire rhetorical point of using the term "ponzi scheme" is not label something as odious and unfair and a sham built on vapor that will inevitable collapse and leave the last-ins with huge losses.

so if your point is that, no, well, it's not that, but it does have these small similarities that have nothing to do with the major rhetorical points one thinks of when using the term, then that's just being picayune at best.

the "green party" and the "nazi party" both have an "n" in them, would you say they are similar in some sense on that basis? or is it the practical definition of "in any sense" that you're struggling with? i'm sure girl gone mad didn't mean that they didn't both involve money, so they are "similar" in that sense, but that's just being obtuse.

[Jack_DeLeon]

3. It is...

It only works if there continues to be exponentially growth where you have more people (or more money) in the future paying for the previous people.

[bananas]

7. Wrong. nt

[laughingliberal]

14. Nope. My generation had its payroll taxes raised to both pay for current retirees &

create the current surplus which was supposed to take care of us. This is nothing but conspiring to steal the money.

[county worker]

15. Every generation has had it's taxes raised. Quit the dramatics!

[laughingliberal]

17. Ours were specifically raised in anticipation of the day when we would all start retiring.

They've used it as a piggybank to keep funding the MIC while keeping income taxes low on the rich. Now they don't want to pay it back. They may very well succeed in stealing it but I'm damned if I'll go along with the lie.

Dramatics? Projection, methinks.

[doc03]

4. It wouldn't be if government didn't spend all the

trust funds. Like Al Gore said they should be in a "Lockbox" the Republicons and the MSM ridiculed him for that.

[PoiBoy]

6. Absolutely correct..!!!

IMO, any talk of "Social Security Reform" should be preceeded by an honest discussion on when does the government start paying back the 30 plus years of "borrowing" from the SSTF to give the illusion of balanced budgets and "fiscal responsibility".

Thom Hartmann claims there is a law that mandates that the governement must pay back the borrowed funds.., can anyone provide a link?

pay back the funds, put the SSTF in a lockbox, and raise the cap on the amount paid in....

one can hope for honesty and transparency....

[doc03]

11. I recently retired after paying into SS for over 42 years and

now they have a committee studying what cuts need to be made to make SS solvent. The F----g money was there and they spend it wars and now they want to balance the budget on our back.

[joe black]

31. Me too.

After dumping in 300,000 of my dollars into the fund.

[Cleita]

5. It's retirement insurance like Medicare is health insurance and

unemployment compensation is insurance for being out of work. You pay into it for the time that you will need it either immediately or in the future. I wonder if he thinks the same way about private insurance? Now life insurance. That's a ponzi scheme that benefits mostly the insurance company. When I worked in insurance life insurance was considered a cash cow and any broker who sold other kinds of insurance always tried to also sell you life insurance because it was almost pure profit.

[bananas]

8. Yes - even on DU so many people are misinformed on this. nt

[Arkana]

10. Almost eighty years after FDR instituted the safety net, conservatives

are STILL fighting it.

And I love that Fox got that scared--they know who their fucking audience is.

[Hubert Flottz]

12. FOX is a GOP/NAZI party propaganda organ.

The funny papers are more credible.

[Orsino]

13. Pay no attention to teh wars behind the curtain.

Cut Social Security now. :mad:

[laughingliberal]

18. +1000 nt

[Mike K]

19. Someone needs to remind this fellow that the program

he dismisses as a Ponzi scheme has been functioning flawlessly for over seventy years enabling millions upon millions of otherwise impoverished seniors to live out their years with some small degree of independent comfort and dignity. These "Ponzi scheme" alarmists don't know what they are talking about.

Social Security is by far the most brilliantly altruistic social program ever implemented by a government and is cause for being proud of America. If the program has flaws it's because the Congress has failed to pay appropriate attention to the need for occasional adjustments, such as regularly compensating for increased life expectancy.

I believe the program could be significantly strengthened by eliminating the FICA cap and by establishing a point at which substantial net worth eliminates the need for payment of benefits. While some will find this latter suggestion offensive it must be understood that Social Security is not an investment program, such as the banksters are eager to turn it into, it is an insurance policy, like health insurance or car insurance. And in spite of the payment of premiums for health or car insurance the best one can hope for is to never need to collect from it.

[Cleita]

28. The problem with means testing is that the more affluent people who

have to pay into the system and not get back benefits will scream even louder than ever that SS needs to be privatized or eliminated altogether. I believe lifting the caps is sufficient and rich people don't need to get any more a month than poor people. Many rich people don't take SS benefits because they don't need that drop in the bucket but it should be voluntary.

[mainer]

20. Definition of Ponzi Scheme -- unfortunately, there are similarities

from Wikipedia:

"A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going."

Now let's dissect that definition element by element and compare it to Social Security as it now functions:

"a fraudulent investment operation" -- the one part of the definition that isn't correct. But only because Social Security was established by force of law, and so is not illegal.

"pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned" -- Is this not true of Social Security?

"usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent." -- Social Security pays out more money, and with unfailingly consistent amounts, than most of us will ever pay into the system. Which is why it enjoys universal support.

"The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going." -- Also true of Social Security.


I believe that Social Security is one of the great advances of a civilized society. But let's not slap our hands over our eyes and deny how it's structured.

[girl gone mad]

26. So many things wrong with that analogy...

But, first and foremost, the US has a sovereign currency.

The government doesn’t have to save up tax receipts or income to repay all its nominal debt, the way households do.

What causes Ponzi schemes to fail? They eventually run out of money. How can a currency-issuing government run out of money?

[deaniac21]

22. Sounds like the defination of social security to me.

[1776Forever]

24. My 78-year-old sister just told me about this about my Grandmother who didn't qualify for SS in '40:

I always wondered why my Grandmother's house was sold after she died and my father couldn't have moved into it instead of having to rent the rest of his life. My sister told me that back then in the mid 30's when my Grandfather died my Grandmother had to sign the house over to the county if you had no income, and then the county helped you with a small amount of money each month and then sold your home after you passed away. My Grandfather, who was a truck farmer and had never paid into SS never worked at a job and had lost his savings in the Depression.

My father had been hurt in WWI and never got a pension from it and couldn't help his Mom out very much. My Grandmother was actually one of the lucky ones that had a home to give to them. Some people in that era just went to the County Home to live out their lives if they had no one to help them out. In defense of Social Security, it is mostly spent by retirees unless they have a lot of money and it would be devastating if it was taken away.

Ed Schultz has been talking about the 99's. Those are the people who are going to have their unemployment stopped soon and many of them are in the 50's and 60's. Some before SS has started. They CANNOT find any jobs! If you are young and think you will never have to face this for a long time, forget about it! Believe me the time flies after 40 and before you know it you will be at that door!

[rucky]

30. That's why you should invest in GOLD!

or the Stock Market.

Not that socialist security ponzi scheme!