Why did Bernie Madoff go to Jail
@whiteheather39 (24403)
United States
August 7, 2011 12:06pm CST
I think this analogy is perfect example to understand what the government is doing to us!!
So simple a caveman could understand. To make it simple, he talked people into investing with him. Trouble was, he didn’t invest their money. As time rolled on he simply took the money from the new investors to pay off the old investors. Finally there were too many old investors and not enough money from new investors coming in to keep the payments going.
Next thing you know Madoff is one of the most hated men in America and he is off to jail. Some of you know this, but not enough of you.
Madoff did to his investors what the government has been doing to us for over 70 years with Social Security. There is no meaningful difference between the two schemes, except that one was operated by a private individual who is now in jail, and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions.
Do you need a side-by-side comparison here? Well here’s a nifty little chart. (Chart Posted as Image)
BERNIE MADOFF SOCIAL SECURITY
Takes money from investors with the promise that the money will be invested and made available to them later. Takes money from wage earners with the promise that the money will be invested in a “Trust Fund” and made available later.
Instead of investing the money Madoff spends it on nice homes in the Hamptons and yachts. Instead of depositing money in a Trust Fund the politicians use it for general spending and vote buying.
When the time comes to pay the investors back, Madoff simply uses some of the new funds from newer investors to pay back the older investors. When benefits for older investors become due the politicians pay them with money taken from younger and newer wage earners to pay the geezers.
When Madoff’s scheme is discovered all hell breaks loose. New investors won’t give him any more cash. When Social Security runs out of money they simply force the taxpayers to send them some more.
Bernie Madoff is in jail. Politicians remain in Washington.
“The taxpayer: That’s someone who works for the federal government but doesn’t have to take the civil service examination.” Ronald Reagan
“If you put the federal government in charge of the Sahara Desert,
What is you opinion of this analogy???
So simple a caveman could understand. To make it simple, he talked people into investing with him. Trouble was, he didn’t invest their money. As time rolled on he simply took the money from the new investors to pay off the old investors. Finally there were too many old investors and not enough money from new investors coming in to keep the payments going.
Next thing you know Madoff is one of the most hated men in America and he is off to jail. Some of you know this, but not enough of you.
Madoff did to his investors what the government has been doing to us for over 70 years with Social Security. There is no meaningful difference between the two schemes, except that one was operated by a private individual who is now in jail, and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions.
Do you need a side-by-side comparison here? Well here’s a nifty little chart. (Chart Posted as Image)
BERNIE MADOFF SOCIAL SECURITY
Takes money from investors with the promise that the money will be invested and made available to them later. Takes money from wage earners with the promise that the money will be invested in a “Trust Fund” and made available later.
Instead of investing the money Madoff spends it on nice homes in the Hamptons and yachts. Instead of depositing money in a Trust Fund the politicians use it for general spending and vote buying.
When the time comes to pay the investors back, Madoff simply uses some of the new funds from newer investors to pay back the older investors. When benefits for older investors become due the politicians pay them with money taken from younger and newer wage earners to pay the geezers.
When Madoff’s scheme is discovered all hell breaks loose. New investors won’t give him any more cash. When Social Security runs out of money they simply force the taxpayers to send them some more.
Bernie Madoff is in jail. Politicians remain in Washington.
“The taxpayer: That’s someone who works for the federal government but doesn’t have to take the civil service examination.” Ronald Reagan
“If you put the federal government in charge of the Sahara Desert,
What is you opinion of this analogy???7 responses
@BalthasarTheRat (656)
• United States
7 Aug 11
That's nice. The analogy is great and fair.
I can tell everyone why Madoff went to jail and our Congressmen don't though. As I think everyone knows so I won't bother.
The bigger question is why we don't at least hold Congress more accountable for their actions?
Madoff goes to jail and the protected legislators don't because everything they pass is law (unless we get the Supreme Court to declare it unconstitutional and that doesn't happen often). This doesn't mean we, the voters, cannot hold the Congress just as accountable as Madoff. It's just harder, because too many powerful special interests have their claws in the individual Congressmen and keep getting them reelected (or replaced by someone just as bad!).
-The Saddened Rat
1 person likes this
@whiteheather39 (24403)
• United States
7 Aug 11
Some would say it is not a Ponzi Scheme because it wasn't an intentional fraud. In fact, the system has worked pretty since its creation in the 1930s. What's happening now is that greed has taken over. I do not think the voters will ever have enough guts to demand Congress be accountable. Your suggestion "too many powerful special interests have their claws in the individual Congressmen and keep getting them reelected (or replaced by someone just as bad!)." Is the absolute truth I think the whole bunch need to be fired or at at least any of the fat cats who have been in office more than one term (2 years).
I feel your sadness..
1 person likes this
@knoodleknight18 (917)
• United States
8 Aug 11
Great analogy. There are a few things that are different:
1 Accountability is spread across a lot more people instead of just 1
2 SS wasn't fraudulent from the start, it actually created a huge surplus that couldn't be spent or paid out as a normal company would have.
3 Madoff had one company and just took money from it never investing and paying returns successfully. The government has the equivalent of lots of businesses, and invested from a successful one into a bunch of unsuccessful ones they control. The government basically made the Bank of Madoff, and ran it successfully but then continually granted itself loans from it's bank which it knew it was a bad investment. Eventually it became so in debt to its other self that the Bank of Madoff (successful) went broke because it made too many knowingly bad loans to Madoff himself. Madoff skipped the process of making a bank in the first place and just took the money for himself. Both are unethical but the government sort of created it's own little legal loophole. It's like when the bank went under got bailed out and still paid millions to execs. The banks are broke just because of bad loans, they are broke because they are paying themselves more than they can afford.
@Taskr36 (13963)
• United States
10 Aug 11
Basically Social Security is just a bigger and better managed Ponzi scheme. It's design is still the same. The reason Ponzi schemes fail is that when new money dries up, so do the returns on old money investments. In SS, the investment is forced so in theory, the new money will never end.
@knoodleknight18 (917)
• United States
11 Aug 11
Yeah and no. It was originally an overly successful forced insurance policy. It only became a ponzi scheme when the government decided all that saved up money could be better "invested" elsewhere. And then just started blowing it. Had it been run as intended cutting SS wouldn't even be on the table, ever.
@estherlou (5015)
• United States
7 Aug 11
Amazing analogy. Well said. I'm close to retirement and am always hearing how the money won't be there. It's scary to some of us baby boomers. Not sure what the answer is, but the government never should have been able to dip into the social security fund. It should have been separate and protected. But then, they never ask us for our opinion, do they. And if they do, they just ignore what we say!
@whiteheather39 (24403)
• United States
7 Aug 11
I am way past retirement age so now I just hope it last until my time is up.
I am sorry I forgot to post the link to the article:
http://lockdoc1.wordpress.com/2010/10/25/why-did-bernie-madoff-go-to-prison/
@celticeagle (168269)
• Boise, Idaho
8 Aug 11
Great analogy! Makes no sense. It is very sad that that there actually no fund like the government says there is for Social Security. And you know what always gets me? When Clinton left off we had nearly 240 Billion in surpluss. Then Bush comes in and sends us to war and costs us trillions.
@andy77e (5156)
• United States
8 Aug 11
I like it. Very true, and very accurate.
The sad part is, most people do not grasp this, and even suggest it's a good thing.
I was explaining that SS money is used to buy government bonds, which puts the money in the general budget where it is spent.
This lady actually suggested that this was a very good safe investment.
People really don't grasp that government has no money to pay back these bonds, and that their money is spent and gone.
I honestly don't know how to convey this fact to them. They seem to be lulled into a sense that government is like 'god' and is eternal and perfect, and can never go broke.
@whiteheather39 (24403)
• United States
8 Aug 11
Jeremiah 5:21
: : : : Hear now this, O foolish people, and without understanding; which have eyes, and see not; which have ears, and hear not!
or
"There are none so blind as those who will not see?"
@bobmnu (8157)
• United States
8 Aug 11
Congressmen and the Ruling class won't go to jail. The basic idea behind SS was you set the retirement age high enough (65 average life expectancy at the time) and not enough people will reach that age and you will have lots of money to spend on your pet projects. Just like Rep Charlie Rangle will not go to jail but if you tried what he tried by not reporting income you would be in jail.
there is also a little know fact that congressmen and government officials are not charged with insider trading even though they make millions by investing in or selling off stock in companies that the government does business with. The government contracts for 25 fighter jets, at a cost of 2.5 billion dollars each will be given to xyz company with the contract announced next week and congressmen buy stock in xyz company and it is legal. A financial reporter talks to a congressman and is told the contract will be awarded buys the stock and can be charged with insider trading.
Congress passes laws all the time and exempts themselves from the law. Why does it surprise you that a crook like Bernie goes to jail and a respectable congressman does not for doing the same thing. how many congressmen have been caught drunk driving and get off because the claim they are on Official Business.
