Everyone has heard of Ponzi schemes. The loose definition describes a scam whereby someone takes funds from an investor and skips town. But there are variations and degrees of scam sophistication.
Generally, a so-called money manager takes funds from investors and after a while decides to use at least some of the funds for himself. He pays off original investors with funds received from new investors.When everyone wants their money back at once, and there isn’t any to give them, frauds are uncovered.
But many schemes unfortunately, escape notoriety. They are never labeled. Take Social Security as the perfect example
It started off as a so-called insurance program, but never was comparable to what you get from a private company. There are no locked-up reserves. Active workers are simply taxed so that they can get future retirement benefits only from taxes placed on other, active. workers. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)
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