A Ponzi scheme, as run by good ole boy Bernie Madoff (pronounced made off, as in with the money), is one where “investors” are encouraged to buy shares in the scheme with a promise of a good return. There is no investment at the end of the day, the money goes into a big pot from which the scheme organisers help themselves.
New investors’ money is then used to pay dividends on the original investors’ money.
Early investors are delighted because they get the return they were promised, which means that new investors are easy to get.
Eventually, however, the money runs out, as there are no new investors.
A government pension scheme is one where civil servants are enticed into the job by the prospect of a gold-plated pension at the end of service. There is no investment at the end of the day, the money goes into a big pot from which the scheme organisers help themselves.
New employees’ money is then used to pay out on the original employees’ pensions.
Early employees are delighted because they get the pension they were promised, which means that new employees are easy to get.
Eventually, however, the money runs out, as there are so many employees now on pensions that it is impossible to employ enough new ones to pay for them.
Bernard Madoff knew what he was doing, got away with it for not quite long enough to ensure his death before he was found out, and will go to jail for several offences including money laundering, fraud etc.
The government knew what they were doing, got away with it for not quite long enough to be unseated in the next general election, and will now get pensions for life plus cash handouts for losing government and their seats.
Conclusion: life is fair? I think a good jury would get Madoff off the hook.
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