Other critics have tagged the Social Security plan with the name Ponzi or pyramid scheme. This criticism comes for the libertarians who criticize the pay-as-you-go funding of the Social Security as taking after the illegal Ponzi scheme. In Ponzi scheme, the investors are usually paid off from the funds which are collected from other investors. This is contrary to what should be done conventionally; there should be a pay off from the profits realized from the business activities and not a trust fund.
A critical look at the usage of trust fund will help draw a picture on how the Social Security is never a viable option. Trust funds are estates of securities and money which is held in trust for the beneficiaries the fund is meant for. Social Security Trust Fund on the other side is the accounting of the disparity between the benefit flows and tax. Here it means, when tax goes beyond the benefits, the federal government takes the excess in return for the bond paying the interest which is an IOU which the government grants itself (Cooke, 2005). The controversy is made worse when the government does not invest the money in carrying out projects which may help the retirees: instead the government puts into use the money in projects like buying foods or building bridges and supporting defense departments.
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