Why Did Bernie Go To Jail?
Why did Bernie Madoff go to prison? 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.
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" (Lock Box) and made available later.
Instead of investing the money Madoff spends it on nice homes in the Hamptons
Instead of depositing money in a Trust Fund the politicians transfer it to the
General Revenue Fund and 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 older 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 the politicians try to force the
taxpayers to send them some more; or they cancel S/S to all those who paid
Bernie Madoff is in jail.
Politicians remain in Washington .. with fat medical and retirement benefits.
"If you put the federal government in charge of the Sahara Desert,
in five years there'd be a shortage of sand.
~ Milton Friedman