Perry’s Ignorant “Ponzi” Social Security Position

Rick Perry has given the entire world a good reason to disregard him as a serious candidate for the President of the United States (not a single candidate helped themselves out last night either with respect to economics) when he falsely called Social Security a “Ponzi” scheme. Regardless of your political affiliation or how you feel about Social Security (whether it’s a success or failure) you must surrender to the facts and the facts are not on the side of Rick Perry.

Bernie Madoff ran a Ponzi scheme, the U.S. Government doesn’t and what follows is the difference:

Bernie Madoff couldn’t print dollars, the U.S. can. As long as Social Security payments are denominated in dollars – the US can meet its obligations without question. This is a statement of fact, not of opinion.

Perry and so far, every Presidential candidate has demonstrated a severe deficit when it comes to understanding or explaining our monetary system and because of this they make claims that make them look stupid.

Is it smart to elect a President who can’t even explain our own monetary system? Would you want someone running the country without at least a rudimentary understanding of economics? Perry has taken himself out of the running for anyone who wants the economy to get back on track, Paul did this a long time ago (his defense of a Gold standard will lead this country into a Great Depression). Who will be the next to demonstrate economic ignorance – the dominoes are falling quickly.

Scott Dauenhauer CFP, MSFP, AIF

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5 thoughts on “Perry’s Ignorant “Ponzi” Social Security Position”

  1. It is a ponzi scheme of sorts. Printing enough dollars to cover the 200 trillion in entitlements means you get your social security dollar amount promised but it only buys a fraction of what you’d planned as the dollars purchasing power collapses. To me this has the same impact as a ponzi scheme that makes off with investors money. Either way, purchasing power is stolen.

    1. Hmm, never heard of a “Ponzi” scheme that actually never collapses and can always continue to pay out to new investors – so in fact, it is not a Ponzi scheme. You fail to mention that SS benefits (I am not addressing Medicare/Medicaid – but those are obligations in US Dollars as well) are indexed for inflation – thus purchasing power is not eliminated (at least in terms of the CPI). I think you miss the point, my post was not a commentary on Social Security or any entitlement program but a referendum on a group of individuals who would frame a debate incorrectly in order to push their agenda. I’m fine with pushing an agenda – that is the point of the political process – but when you purposely frame an economic debate falsely, you are committing a fraud. If you don’t know that you are framing the debate falsely, you are ignorant. I believe Perry is not a fraud (on this issue), just ignorant of our monetary system. If you want to make an argument against social security – make it, but don’t use the straw man of insolvency, the US is not revenue constrained. SS is not a Ponzi.

  2. Scott, I don’t know you, but I like your succinct defense of accurate language. “Ponzi” = fraud and you are correct, SS is not a fraud. It’s early in the campaign season, I’m sure we’ll hear “nazi” “commie” “socialist” and many other specific terms mis-used as general insults, with little regard to actual meaning. It’s along time until next November…

  3. Scott, I do know you and I do like your accurate description of SS too. Keep it up. I didn’t know you read Mother Jones :-).
    Steve

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