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Fund B has been making gains because more people are investing in it than withdrawing.
Since Bernie needs to make the people in Fund A think they are doing better, he "borrows" the extra money going into Fund B and applies it to the loss in Fund A.
Being a big believer in efficient Markets Bernie does a lot of detailed calculations showing how Fund B will do much better and evtually things will work out. He keeps great records of all the money he has borrowed from Fund B and even credits phantom interest to the "Trust Fund". So his reports show there will actually be more money in the "Trust Fund" of Fund B.
Unfortunately for Bernie the economy does not do as well as he had planned and fewer people were contributing to Fund B, so it also started to loss money. Luckily for Bernie he has that massive pool of IOU's to draw from!
Now all he needs to do is take some of the growth from Fund A to pay back Fund B but Fund A is still losing. Hmm, what to do. Well he goes to his buddies and borrows money from the remaining Fund A by using it as collateral, luckily his palls don't know how much of Fund A is owed to Fund B, so they lend him the money but he now needs to find new investors for both A and B in order to keep it going.
The amount of people. If you make it compulsory then there's never a run on the system.
In other words we have Government Sponsored Ponzi Schemes. The SSA says it's not though...
the SSA is in fact a huge ponzie scheme. in order for it to not be one, it would have to be completely voluntary for the populace.
I dont know about anyone else, but I could have taken the money stolen from me by the SSA and made enough money to have retired 3 years ago at age 45, instead of having to wait until 2018 to retire.
Please show the stats that show how many eligible people have NOT gotten their SS checks?
Madoff worked great for 25 years, every check cleared. You can't look at the past to extrapolate the future. SS is 100% dependent on demographics and the economics we create. Just a few hiccups in their estimates and it goes crashing down.
How is what I described (other than we can force people) different than SS?
"That's as good as money, sir. Those are I.O.U.'s."
That sums it up! I love that movie.
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