Financial terminology explained

[Balog]

Marko Kloos breaks down some of the finer points of fiscal nomenclature. Seems apropo after the Bernie Madoff dealie, and it's PF win besides. http://munchkinwrangler.wordpress.com/2009/03/13/explaining-financial-terminology/

[myrockfight]

Click free...


"With all this talk of “Ponzi schemes” and confusing financial terms being thrown around in the news today, I thought it might be helpful to explain some of those terms to the interested layperson.

When a private citizen accepts investment money from people, and uses the cash from subsequent investors to pay out promised gains to the early investors, we call that a “Ponzi scheme” (although that term is likely to be replaced by “Madoff scheme” in the near future.)

When the government accepts investment money from people, and uses the cash from subsequent investors to pay out promised gains to the early investors, we call that “Social Security”.

The difference between the two is that investing with the private citizen is optional."



Yeah. I'd say that is about right. I think I may even write to my local rep outlining those exact thoughts. With what has been going on lately, I doubt they will be able to get enough in taxes to pay out half the social security that they would have been able to 5 years ago. 

[Jamisjockey]

Click free...


"With all this talk of “Ponzi schemes” and confusing financial terms being thrown around in the news today, I thought it might be helpful to explain some of those terms to the interested layperson.

When a private citizen accepts investment money from people, and uses the cash from subsequent investors to pay out promised gains to the early investors, we call that a “Ponzi scheme” (although that term is likely to be replaced by “Madoff scheme” in the near future.)

When the government accepts investment money from people, and uses the cash from subsequent investors to pay out promised gains to the early investors, we call that “Social Security”.

The difference between the two is that investing with the private citizen is optional."



Yeah. I'd say that is about right. I think I may even write to my local rep outlining those exact thoughts. With what has been going on lately, I doubt they will be able to get enough in taxes to pay out half the social security that they would have been able to 5 years ago. 

That will be going up as my note of the day on facebook......

[Balog]

I've never understood how people don't get this concept, or why they think SS is in any way workable.

[erictank]

"With all this talk of “Ponzi schemes” and confusing financial terms being thrown around in the news today, I thought it might be helpful to explain some of those terms to the interested layperson.

When a private citizen accepts investment money from people, and uses the cash from subsequent investors to pay out promised gains to the early investors, we call that a “Ponzi scheme” (although that term is likely to be replaced by “Madoff scheme” in the near future.)

When the government accepts investment money from people, and uses the cash from subsequent investors to pay out promised gains to the early investors, we call that “Social Security”.

The difference between the two is that investing with the private citizen is optional."

It'd be hilarious, if only it weren't the truth...

[Firethorn]

I've never understood how people don't get this concept, or why they think SS is in any way workable.

SS would be workable if it was run more like an insurance scheme; it covers the truly disabled so they can live a modest life if unable to work, and/or the age necessary to get payments was high enough that most never get it.

As is, either the rates will need to be increased in the future or benefits limited.