In the Scheme of Things

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There sure has been a lot of talk around town lately about Ponzi schemes. Rick Perry has been blasted about referring to Social Security as one. Seems the very word "Ponzi" raises a brow.

Typically, most folk think about investment opportunities when they hear the word "Ponzi." And that is because those schemes are what make the news. Poor, greedy people, looking for that fast buck are quick to give their money to some one in exchange for unrealistic returns, not realizing that those returns are being paid by new investors luring into the scheme by the very ones that got in early enough. And those last "in" are the losers. That's bad.

But you know, America is one giant Ponzi scheme in itself, and most people can't see it. Social Security pays benefits to retired people from funds collected from those still working, not from the contributions of the retirees as some people think.

Insurance companies, whether health, home, or auto, pay claims to losers from the premiums paid by the others. But nobody calls them Ponzi schemes. Giant multi-level marketing businesses lure unsuspecting, greedy people, on the promise of making big profits in sales. All they really have to due is to recruit new people in to buy their "Starter Packets."

Casinos pay their winners from the losses of the losers. But just as insurance companies and everyone else, the casinos keep far more as profits for themselves. A Ponzi scheme?

For years now, our government has been luring people into the stock market with the creations of the many IRA, 401, and College Savings plans. More and more money is collected and placed into the stock market or banks controlled by long term rules to protect the financial industries. Stocks and interest rates soar, not because the companies or banks are solid, but merely because of the new money coming into play. And when things pop, the newest ones in become the last ones out and thus are the losers.

So, are Ponzi schemes bad? I'm sure at least some of you have benefitted by one some time or another, but never even realized it. Only when someone is a loser does on call foul. No one compains about pulling a winning crank on a slot, but when one looses his quarter, it'd crying time. No one complains about getting a health insurance settlement, but only cries foul about his premiums. Nor does one complain about getting in on a multi-level sales scheme and making a huge profit, but surely whines when he buys in only to find the market is already saturated.

Capitalism is what has driven America for 200 years, and good or bad, Ponzi schemes are everywhere whether you care to admit it or not.

So, get over it. But remember, you've got to know when to hold 'em and know when to fold them. Not that I always have, but..
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