Mises’s Stephen Mauzy weighs in on institutionalized Ponzi schemes:
The 1960s voting generation seems to have learned a thing or two about the fine art of institutionalized Ponzi schemes from their progenitors. Medicare’s costs doubled every four years between 1966 and 1980. Total Medicare spending reached $440 billion for fiscal year 2007, which was 16% of all federal spending. Today, only Social Security and defense consume more taxpayer money.
Given the current pattern of spending growth, the generation of the 1960s will bankrupt their Ponzi scheme twice as fast as its parents did their own. The Medicare hospital-insurance trust fund (a trust fund in name only) will become insolvent by 2019, according to Richard W. Fisher, president of the Federal Reserve Bank of Dallas. He has estimated that in order to “cover the unfunded liability” for the Medicare program today over an infinite time horizon, “you would be stuck with an $85.6 trillion bill.”
Mauzy points out that at least the Madoffs and Sanfords of the world are only effecting willing dupes by their actions, rather than taking a gun and forcing people to participate in their schemes. When he says “place blame where it belongs”, he is referring to the fact that participants dumb enough to think they will get something for nothing deserve what they get. (meaning us, the voting public, as it pertains to institutionalized Ponzi schemes)
The truly sad part about institutionalized Ponzi schemes is the excessive use of coercive force involved. And of course, the fact that they are paid out of payroll taxes rather than capital gains taxes.
The rich in this country don’t earn paychecks, they make their money on capital gains and only pay a flat 15% rate with no payroll tax. This notion that the rich pay for these Ponzi schemes far more than the poor is ridiculous. One more layer of lies on a pyramid of deception.