Public pensions mirror Madoff’s Ponzi scheme

“In a world full of lies, the most dangerous ones are those we tell ourselves.”

McCaleb: Public pensions in some ways mirror Madoff’s Ponzi scheme – Watchdog.org

“HBO debuted its original movie on Ponzi-schemer Bernie Madoff over the weekend. Based on Henriques’ book “The Wizard of Lies,” the film (and book) tells the chilling tale of Madoff’s fraudulent investment scheme in which more than 2,200 people lost almost $20 billion in retirement savings.

That is a lot of victims losing a lot of money.

But it’s peanuts compared to what public pensioners – in Illinois, Pennsylvania, New Jersey and elsewhere – stand to lose if drastic reform measures aren’t taken soon. More on this in a moment.

A Ponzi scheme is a form of fraud in which early investors see quality returns, not because their money was invested wisely as the investors are led to believe, but because new investors fund the payouts. The cycle perpetuates itself – more and more new investors are needed to continue to fund previous investors’ returns at an unbeknownst higher risk to themselves – until it inevitably collapses….

Take Illinois, whose five state pension funds are now underfunded by more than $130 billion, worst in the nation. At that deficit, the pension funds have in hand just about 37 cents of every dollar they will owe to current and future pensioners.

But it actually could be much worse than that.”

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This entry was posted in Crime, Darwin Award Nominee, debt, government, History, Media, politics. Bookmark the permalink.

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