Earlier quoted context omitted.
Does it? Is a lake with an inflow river and an outflow river a Ponzi lake?
Ask all the lakes that have shrunk or dried up because their outflows exceed their inflows.
[deleted]
The Scandal of Financial Nihilism
141–150 of 165 posts
Re: The Scandal of Financial Nihilism
#142Earlier quoted context omitted.
"Social pension system is a Ponzi scheme" is argument I've heard from people with certain political leaning often enough I wondered if Reagan or Thatcher said it or something. It never made sense to me. As long as the number of people is relatively stable, there's nothing Ponzi on it. Even with the number of people changing, there are other important inputs into the equation - automation, efficiency, etc.
All of these systems rely on working people to pay the tab for retired people because of demographic shifts and inflation causing outputs to exceed inputs. At least Social Security is definitely a Ponzi that per the SSA will only be able to guarantee me 65% of what I am owed when I hit the (continually increasing) payout age. I align with neither Reagan or Thatcher, but I did pass my math classes.
But it's not inherently a Ponzi scheme, it's just been mismanaged.
Re: The Scandal of Financial Nihilism
#143Earlier quoted context omitted.
> Either that, or they're history buffs. What precipitates the redistribution of wealth, historically? Some kind of gigantic disaster -- war, famine, plague, social collapse. You're mistaking redistribution for destruction... Sure, things are technically more equal if everyone becomes homeless. But there wasn't really a redistribution...
A lot of people who think along these lines, especially younger people, don't think of wealth as something that can be created or destroyed at all. They just believe that there's some fixed amount out there, and that if ordinary people don't have enough that must be because the super-rich have stolen their fair share and need to be brought down a peg. The very idea of wealth that can be created is seen as a lie sprea…
I think you can in theory believe that wealth can be created - but also at the same time be convinced that modern heavily financialized[1] economy does very little of that.
Add to that how a lot of people have seen their societies become substantially worse of as a whole - yes, iPhones are awesome and modern cars are safer and so on, but instead of having a union job you pee in bottles in Amazon warehouse, and instead of buying a home you are forever renting a studio apartment.
The Simpsons titular family of one high school educated guy with house and three kids on single income went from "typical boring dude" to "impossible dream" over the course of one or two generations, after all.
Re: The Scandal of Financial Nihilism
#144Earlier quoted context omitted.
In the 60s you could buy a median home with 2.1x the median income. In 2019, the ratio is 3.5x. https://themreport.com/news/data/02-02-2021/pressing-housing...
Median house in the 60s is not the same as median house in 2022. You could probably buy a median house from the 60s (i.e. 1000 sqft, no air condition, in a polluted area (this was pre-EPA time, so almost everywhere was polluted) etc.) right now for way below current median.
A 1950s or 1960s 1200-1400 sq ft rambler on 0.15-0.25 acres goes for 4x the median income in my metro area in the middle of the road suburbs, 3x in more impoverished areas for a comparable house from the 1920s and 5x for a comparable 1970s-1980s home in nicer areas.
To top it off, mortgage interest rates doubled and prices have not dropped.
Re: The Scandal of Financial Nihilism
#145Earlier quoted context omitted.
"Social pension system is a Ponzi scheme" is argument I've heard from people with certain political leaning often enough I wondered if Reagan or Thatcher said it or something. It never made sense to me. As long as the number of people is relatively stable, there's nothing Ponzi on it. Even with the number of people changing, there are other important inputs into the equation - automation, efficiency, etc.
All of these systems rely on working people to pay the tab for retired people because of demographic shifts and inflation causing outputs to exceed inputs. At least Social Security is definitely a Ponzi that per the SSA will only be able to guarantee me 65% of what I am owed when I hit the (continually increasing) payout age. I align with neither Reagan or Thatcher, but I did pass my math classes.
Is taxes paying for education Ponzi scheme as well?
If not, why is current workers paying future workers (now kids) education different from current workers paying past workers (now retirees) pensions?
Re: The Scandal of Financial Nihilism
#146Earlier quoted context omitted.
All of these systems rely on working people to pay the tab for retired people because of demographic shifts and inflation causing outputs to exceed inputs. At least Social Security is definitely a Ponzi that per the SSA will only be able to guarantee me 65% of what I am owed when I hit the (continually increasing) payout age. I align with neither Reagan or Thatcher, but I did pass my math classes.
Is taxes paying for education Ponzi scheme as well? If not, why is current workers paying future workers (now kids) education different from current workers paying past workers (now retirees) pensions?
> why is current workers paying future workers (now kids) education different from current workers paying past workers (now retirees) pensions?
Well for one thing, education scales with demographic shifts and pensions don't. If less people are being born, at a roughly similar cost/student (administrative bloat aside), educational costs go down as the population growth shrinks. Pensions on the other don't, they only go down on the other end (people dying) and reductions in the birth rate negatively impact the ability of successive generations to pay for prior generation's pensions. Education costs are also strictly bounded per person, as they aren't for life, only for K-12.
I'm not trying to be coy, but it's pretty shocking to me there's multiple respondents that don't seem to understand that the basic premise of public pensions/social security are literally ponzi schemes that are unsustainable with demographic shifts. They utterly rely on continued economic and population growth in order to have enough inflows to meet their outflow obligations, which I would suggest is nearly identically equivalent to a ponzi scheme, where you are paying old investors with new investors money...
Re: The Scandal of Financial Nihilism
#147Earlier quoted context omitted.
Is taxes paying for education Ponzi scheme as well? If not, why is current workers paying future workers (now kids) education different from current workers paying past workers (now retirees) pensions?
> why is current workers paying future workers (now kids) education different from current workers paying past workers (now retirees) pensions? Well for one thing, education scales with demographic shifts and pensions don't. If less people are being born, at a roughly similar cost/student (administrative bloat aside), educational costs go down as the population growth shrinks. Pensions on the other don't, they only g…
I don't think anything you said explains why it would be a Ponzi scheme.
Ponzi scheme isn't a scheme because you pay old people with new people's money, but because there is promise of exponential growth that is unsustainable and often literally impossible.
For this to be true of pensions, they would have to (inflation adjusted) grow, which they don't. Yes, if there's less productive people and more non-productive people, that changes the balance but it is a balance, not unlimited growth of a Ponzi scheme.
Re: The Scandal of Financial Nihilism
#148Earlier quoted context omitted.
As a billionaire, you could inject billions into research on your specific condition and have reasonable expectation that something will come out of it within your lifetime.
Can you though? It's not as if (say) cancer or Alzheimer don't already receive billions in funding but a definitive cure seems as far away as ever. Not all problems can be solved with money, and even those that can be solved with money sometimes need a lot more than billions.
"U.S. cancer death rate has dropped by a third since 1991"
Re: The Scandal of Financial Nihilism
#149Earlier quoted context omitted.
> why is current workers paying future workers (now kids) education different from current workers paying past workers (now retirees) pensions? Well for one thing, education scales with demographic shifts and pensions don't. If less people are being born, at a roughly similar cost/student (administrative bloat aside), educational costs go down as the population growth shrinks. Pensions on the other don't, they only g…
I don't think anything you said explains why it would be a Ponzi scheme. Ponzi scheme isn't a scheme because you pay old people with new people's money, but because there is promise of exponential growth that is unsustainable and often literally impossible. For this to be true of pensions, they would have to (inflation adjusted) grow, which they don't. Yes, if there's less productive people and more non-productive pe…
"A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors." [1]
The only thing there that is arguably untrue about social security / public pensions is "investors". Depending on whether or not you consider contributions to social security / public pensions as an investment or not, it falls on one side or the other of the literal line of what a Ponzi scheme is. Even if you don't consider it an investment, in /every other aspect/ it is effectively the same as a Ponzi scheme.
That is not to say that public pensions are a bad thing. I'm merely pointing out that they carry a demographic risk that is unaccounted for, just as a Ponzi scheme carries significant investment risks that are unaccounted for due to faked returns.
There is no requirement that you promise exponential growth that is literally impossible for something to be a Ponzi scheme. The key element is that you use money from new participants to pay out "returns" to older participants, thus fraudulently claiming/faking said returns. That is it.
Re: The Scandal of Financial Nihilism
#150Earlier quoted context omitted.
> We were told all these bailouts and austerity and artificially low interest rates were the way to solve things and while stock markets bounced back it never felt like a genuine recovery. Maybe it's because I'm not in the US, but do people actually feel this way? Sure, the GFC was a big deal at the time, but as a millennial, who grew up upper-middle-class and is now in his mid-thirties, I don't feel it has impacted…
Below you, everyone felt it and felt it hard, everywhere.
I've been staring at your comment trying to decide if it's intentional smugness or ignorance. I'm going to assume good faith.
There were multiple countries with little to no impact from the GFC[1]. These countries include billions of people, and significant portions of the worlds GDP. Most western economies had recovered in 3-5 years[2].
Not everyone felt it and felt it hard, nor was this everywhere. I'm not arguing semantics, for billions of people it was effectively a non issue.
1. https://www.internationalaffairs.org.au/australianoutlook/go... 2. https://bigeconomics.org/the-countries-most-and-least-affect...