Friday, March 27, 2015

Perry’s Ponzi scheme and Obama’s more insidious scheme

Perry’s Ponzi scheme is easier to debunk and get out of the way so I’ll start with that first. As you much know by now Perry has claimed that Social Security is a Ponzi scheme and many people have r3esonded by saying that it isn’t; which is true; however it isn’t good enough to say it isn’t true without further explanation.



(This was originally posted on Open Salon September, 9, 2011)

A closer look may also reveal that Perry and others may want to create a real Ponzi scheme or something way to close to it if they get the chance. Simply saying that it isn’t a Ponzi scheme, without further explanation, wouldn’t be good enough for at least one good reason; they do have some similarities and if the debunkers don’t address the details then they will allow the schemers to do so without scrutiny.


Both Social Security and Ponzi schemes, which are sometimes called pyramid schemes, involve collecting money from one segment of society to pay off another segment of society. In fact not only do both these do this but so do gambling and insurance institutions. In my Blog about Health care Premiums and where they go I discussed how there was an enormous amount of waste involved in the private sector insurance system since they had to spend an enormous amount on advertising and other expenses as well as keep a large amount for the profits of the stockholder; none of this money goes to the health care which is what it is intended to do. Social Security operates in a similar manner only it is under the control of the government and there is no need to pay for ads or set aside a lot of money for profits and other expenses involved only in the private sector. Social Security has never promised the recipients an enormous amount of easy money that they could make if they invest in it. A Ponzi scheme, however, does this; the way they promise that they will get these returns involves recruiting more investors to pay off the older investors. Theoretically the first couple of investors could actually receive large profits if they recruit enough people. However the ability of second tier investors to recruit will rapidly decrease and the scheme will inevitably fall apart and be exposed. This happened with catastrophic results on a large scale in Albania (Google: Albanian Ponzi scheme) in the 1990’s and it led to riots and a collapse of the already poor economy. Social Security, on the other hand, is intended to be a flat exchange with less administrative costs than the private sector. There could be some inefficiency in this; and, if so, then it would be appropriate to reform it and ensure that they have open books, with some exceptions for the privacy of personal information.

That doesn’t seem to be what any of the Republican’s including Rick Perry seems to have in mind though. Instead they seem to be interested in eliminating it or privatizing it. They don’t seem to want to tell the public full details or address the basics of how these plans go in a clear manner which should be enough o raise some serious doubts. Rick Perry may not want to create a Ponzi scheme but he may be interested in creating something way to close which would cost the public an enormous amount of money. I could go into more detail; however in my opinion his schemes are so bad that most reasonable people should recognize them on their own and the rest probably wouldn’t believe me anyway.

Obama’s scheme may be a little more insidious though. It may not be a lot more insidious; however the Mass Media and the traditional political establishment are attempting to make it appear as if there is a choice between the Democratic plan and the republican plans and that the Democratic plan may be the lesser of two evils. This is the main problem with Obama’s plan and the fact that it doesn’t do much, as far as I can tell, including addressing the simplest basic problems with the economy as I attempted to do recently in my blog about the Semi-secret fundamentals of economics. I’m not the only one to address the basic problems of the current economic system; however I site this because it is the one that I’m most familiar with; however none of the people in political power are attempting to address these flaws whether they come from my review or anyone else’s. Instead they present the same ideological choices as the only options, even though they don’t address many of the most corrupt and basic problems, presumably because they benefit those in power who donate to political campaigns. Obama said “time to stop the political circus.” I agree; however he should start by stopping his own contributions to the “political circus.” When he started by asking for this on short notice on the exact date of the Republican debate he made it clear that he was just as willing to play political games as the republican’s. He then agreed to change the date when the Republican’s refused to submit to his timetable. This is one of the few times where I actually think the republican’s had a good reason although I don’t agree with the way they requested that it be held opposite the football opening. Obama responded during the debate by leaking what CNN called “breaking news” about what Obama was going to reveal the following night. It is clear that although both sides continue to ask the other side to stop the political deception neither side is willing to do it themselves.

The media circus that they showed on TV wasn’t much better and it was surrounded by an enormous amount of hype. There was an enormous amount of clapping going on and the usual amount of talking heads trying to interpret things for the public. This clearly involved an enormous appeal to the emotions of the public; if Obama truly wanted to stop the “political circus” he could have and would have done things much differently. He also indicated that they should pass this bill, whatever it is, right away. He could have come up with something long ago and given the public plenty of time to review it without saying that it is now an emergency and we need to pass it right away without reviewing the details. He should have suspected that there was little or no chance that the Republican’s would pass it right away; therefore it isn’t unreasonable to suspect that he might have wanted to keep the political argument alive for his own benefit, not the benefit of the public. If they did pass it in a hurry then it almost certainly wouldn’t do much if any good since it doesn’t seem to address the most important problems. That doesn’t mean there aren’t good things in there; it apparently calls for increased investment in schools whi9ch clearly we need. However he claimed that this would all be paid for although I have no idea how. As far as I can tell he intends to come out with the cuts to pay for it later, on September 19; perhaps after the time he is requesting them to pass the bill. However they will of course not pass this that quickly anyway which indicates that both sides seem to want to continue to argue without accomplishing anything. Both sides are clearly collecting their finances for their campaigns from the same corporations who will win no matter which side wins this argument at the expense of the majority of the public.

I could also go into much more detail about how incompetent and corrupt the Obama administration is; however there is clearly enough evidence to indicate that they’re not trying much if any harder than the Republican’s. They seem to be counting on the assumption that the public will continue to accept the same false choice between corporate candidate A and B. If the public is complacent then they may be right; and this will lead to an increase in corruption that could be so bad that we could wind up with riots here in the USA as bad, or worse, than those in Greece or the UK. It is important that as many people as possible decide to stop settling for this false choice. If there is enough grass roots effort to elect more people from the grass roots level then we could have major change. If possible we should elect a president that isn’t from either of the two corrupt parties that aren’t paying any attention to the concerns of the public. This should involve election reform that is controlled by the public and instant runoff elections that enables third and fourth parties to compete with the corrupt duopoly. The ability of the corporations to buy influence needs to come to an end if we’re going to have a sincere democracy.

To make things worse the boy who cried wolf has come out with another credible terror threat for the tenth anniversary of September eleventh. As in the old fairy tale there is no guarantee that there isn’t a real threat but we clearly have enough information to know that those in power should not be trusted to manipulate us. In my blog last year about September 11 2051 I speculated about how we could learn from this and avoid future disasters. Since then those in power seem to have learned little or nothing about avoiding future disasters assuming that is what they want to do. Instead they seem to be more concerned with trying to manipulate the public and maintain the status quo. This doesn’t necessarily mean that this involves the most bizarre conspiracy theory to use fear to control the public; however there is a possibility that they believe many of their ideological claims and are doing this to manipulate the public anyway whether they fully understand what they’re doing or not. Generally speaking, either they do understand what they’re doing and they’re corrupt; or they don’t fully understand what they’re doing and they’re incompetent. Either way those in power should be removed from power and we should have a government that addresses the most important issues based on an accurate and open perception of reality; which is why I believe we should seriously consider a truth and education commission or something similar to that once the details are worked out with the input from the public. What they’re doing right now seems a lot like Kevin the lost bunny of the apocalypse is behaving.



Click on cartoon, made available by Scott Stantis, to see his blog and more of Kevin.

It is also a lot like the tactics that have been used in other parts of the world that were described by Naomi Klein in The Shock Doctrine (available free online) which I highly recommend for those of you who haven’t read it already. Naomi Klein describes how many of the most powerful ideologues including many followers of Milton Freidman have been trying to manipulate the public in moments of crisis that enable them to convince people to go along with programs that benefits the most corrupt at the expense of the majority of the public; and they have often used this to implement long term changes that have been locked into constitutions of other countries or other long term agreements that are very difficult to change.

These agreements are often very similar to the debts people used to have to company stores that were designed to ensure that those in power stayed in power and the working class could never get ahead; instead they were forced to work at virtual slave wages for one generation after another. In fact if some of you can’t find a copy of it at your local library perhaps you might consider donating one.(For more information on Blog see Blog description and table of context for most older posts.)


The following are the original replies when this was first posted on Open Salon.

thank you! if you ever want to run for office, let me know and I will work for you! (a political circus sans cages where as always corrupt political handlers (going all the way to the executive top) cheered on by an amoral titillating media allow the savage-corporation-big-cats to actually devour the entire audience of citizens.) [r] libby

libbyliberalnyc September 09, 2011 01:46 PM

If one of us runs for office it will be you; and I will do what i can to support it. Actually it should be a job interview controlled by the public. It won't have the perks and bribes but you get more well deserved respect. You can be one of the first to apply under the new system. :-)

zacherydtaylor September 09, 2011 01:51 PM Power corrupts.

Sorry both of you but it would corrupt you too.

Elections are a sham. No matter who is running. In any population large than a village, the electorate doesn’t know the candidates. That turns any election into a contest between two ad companies. That takes money. That money is forthcoming from those who will want a return on that “investment”. Soooooo, we’re back with the same old, same old.

The present crew are corrupt for persona gain - you’d become corrupt so that you could stay in office to “serve the people”. Where have I heard that before?

Our reps should be chosen by lot. No corruption. No gender inequalities. No racist bias. No career politicians. No political parties jockeying for “power”. Just normal, average citizens, doing their best to represent their fellow citizens for ONE term only. Employees who could pay attention to the job at hand instead of being occupied with getting re-elected to the pork barrel trough at the next “ad company contest”.

Government of, by, and for the people.

. skypixie0 September 10, 2011 12:18 AM

Skypixio, I agree that power corrupts and that we should have government by and for the people; however I’m not sure that it would do any good to choose by lots. This could aslo be corrupted if it is done in secrecy even if it appears to be in the open. I think it would be better to have an open system and regardless of how we choose our leaders they should have to answer directly to the people openly on a regular basis and shoe the work for what they do starting at the basic level.

Lyn, I agree that the schools should reform when they have ligitiamte problems; however they can’t do that while they’re being starved for funds. In the cases where there are teachers that really do need to be fired they should be; howerver we need to provide incentives so that many of the good teachers aren’t chased awy by lack of funds. Also there are many cases where they really do need more funds for buildings and other supplies especially in the poorer districts. This needs to involve changing the way we finance schools; by relying primarily on property taxes while the income is being distributed in a very unfair manner they are designing things to keep the poor in their place and maintain power for the rich.

Also since I wrote this I was happy to see that Lawrence did for the most part make a good argument about Perry’s Ponzi scheme that explained it properly, with one minor ecception. He claimed that Social Security would be safe forever. Whether this is true or not will depend on whether they keep it open or not and they minimize administrative costs and waste without giving too much money to politically connected people. If this scrutiny is maintained then Lawrence would be correct.

zacherydtaylor September 12, 2011 09:51 AM

zachd, thanks for your generous remark above re my running for office. did not catch it quickly but it warmed me considerably, though I doubt I would have the psychological stamina and maybe the temperamental orientation to handle such a role. but I think those of us who have moral compasses and sane and logical sensibilities are very much needed in direct political activity in this country.

your insights always so penetrating and profound (and generous in degree of thoughtfulness and validation, especially this one I got such a kick out of). I thank you for them as always! libby

libbyliberalnyc September 14, 2011 03:13 PM

Our loss if you don't run; however hopefully we can find some one else to do so and whenever possible more can be done directly by the public through ballot initiatives etc.

zacherydtaylor September 16, 2011 10:20 AM





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