It’s worse than a Ponzi scheme. I’ll explain, but first I’ll give a brief history of how this form of fraud got its name. The name comes from Charles Ponzi, an Italian immigrant living in Boston who found a clever way to make money through the postal system. His discovery came from postal-return coupons, a coupon that can be redeemed for a postage stamp to return mail back. Since the coupons were cheaper than the postage stamps, Ponzi could buy coupons in bulk from foreign countries and exchange them in the United States for postage stamps. He would then sell the stamps to make a profit. Ponzi lined up investors for his business. If he could make 50 percent returns on his money, he promised, then he can do it with your money too. However, Ponzi did not invest any of this money. Instead he kept the money for himself and when investors wanted a payout he did not have any investment earnings, so he paid them with money from newer investors. The first wave of investors could be paid by the second wave of investors, but the second wave needed to be bigger than the first. Consequently each new wave of investors needed to invest more money than the previous. Ponzi made millions of dollars off this scheme, but eventually was caught after a report from Barron’s magazine started questioning his investments. He spent the rest of his life in prison.

Similarly Social Security is a scam that relies on taking small amounts of personal income (via payroll taxes) from younger generations of people to be put in a government “trust fund” and given to older generations of people. Social Security was created in 1935 as a part of President Roosevelt’s “New Deal.” At the time the average life expectancy was 61 years and eligibility for Social Security was 65 years of age. From the beginning of its conception the system was intended to take money from everyone and only benefit the ones that lived long enough to be eligible. Over time life expectancy in the United States has risen to well above 65 years of age making the trust fund insufficient for payouts. In 2014 the gap between payroll taxes and benefits was $74 billion. World War II compounds this problem by the creation of the baby boomer generation. As the baby boomers begin to retire this gap will increase rapidly. The Social Security trust fund is projected to be exhausted by 2034.

Much like Charles Ponzi used his investors’ money for personal benefit, the government has taken money from Social Security funds to pay for its agendas. This is the reason that Clinton’s budget surplus is a myth. Recently $150 billion was transferred from Social Security to fund government disability benefits. This doesn’t sound like a system meant to benefit those who are retiring.

The reason Social Security is worse than a Ponzi scheme is because everyone is forced to participate via government coercion. Maybe some people want do something different with their money that has been taken from them, like letting their children inherit it. If someone wants to rightfully keep fruits of their labor and make their own decisions for retirement they will be met with guns pointed at them and the threat of imprisonment. At least in a Ponzi scheme the people that invested can get out when they realize it’s a scam.