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Ten Things I Think I Think (and Personal Finance Links)

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  1. Download Portal for Free - I think you should jump on this freebie. I haven't been into video games since the days when EA changed John Madden Football to require approximately 17 fingers and 4 sets of opposable thumbs. However, a few friends have quietly said that Portal is the best game to come out in years. Here's our chance to find out: Portal is free until September 20th. Usually it will set you back $10. Don't blame me if you get addicted and end up buying Portal 2 for $30.
  2. HP TouchPad - I think if you didn't score the HP TouchPad for $99, it is well worth it to get one on Ebay if you can find one for under $250. It's an amazing amount of functionality in such a small package. Went to a sports bar to watch my favorite out of town NFL team and there were at least a dozen people with tablets following their fantasy football team. I followed an ESPN chat and got all the injury information. I ran a little demo for a couple of people who had iPads, and they were blown away by the TouchPad's ability to multi-task.
  3. HP TouchpPad Insurance - I think it doesn't make sense to buy the insurance that HP is selling. HP is selling TouchPads for as low as $99, but the 1-year support with accidental damage protection is $49. For two years it will cost you $179. I got a $1000 laptop from Dell. They aren't charging me $1800 to insure it for two years.
  4. Denim at Target - I think that with back to school sales being done, I am going to miss this Target commercial - catchiest jingle in a long, long time:
  5. Sony PlayStation Network (PSN) Terms of Service (TOS) - I think that consumers should think twice about any Sony products. I don't have a Sony Playstation Network or a PS3, but I saw that Sony is requiring everyone who uses their PSN to waive away the right to sue. Hidden in a pile of legalese, you must agree to waive a class action lawsuit against the company. I'd venture that 99.99% of people (probably a few more nines in there) will never read the terms of service. For those that do read it, wish to use the service, and retain their legal rights, they have snail mail a letter to Sony within 30 days. I think it's pretty rotten to combine the hidden TOS with the rebate breakage phenomenon (a large percentage of people will not follow through with the process of snail mail) on a small chance that they'll be able to get $5 from it someday.
  6. Political Thoughts - I think that I rarely have anything to say in the world of politics. In fact, most of the time, I kick, punch, scratch my way to not get involved in them. Here are a couple of reasons why...
  7. Rick Perry, Social Security, and Ponzi Schemes - I think Rick Perry calling the Social Security a Ponzi scheme is extremely ignorant. Perhaps it is something that he said to get votes as a lot of people are upset with the state of Social Security. However, it reflects badly on himself and his understanding of both Ponzi schemes and Social Security. Expect more on this in an article this week.
  8. Michelle Bachmann, HPV Vaccines, and Mental Retardation - I think that Rick Perry is lucky to have the spotlight pulled to Michelle Backmann for this comment about HPV vaccines causing mental retardation. I don't care where you stand on the issue of mandatory HPV vaccines, the fact is that there's no link to mental retardation at all. It is irresponsible on the highest level for Michelle Bachmann to go off something that a random person told her. If this is the way Michelle Bachmann would run any kind of office, I wouldn't elect her to manage my recycling bin. She conjured up thoughts of MonaVie distributors saying that it cures cancer and autism.
  9. MLM Article of the Week - I think that makes the obligatory MLM segue a lot easier than usual this week. Here's my MLM article of the week: MLM Scammer: Then Why Hasn’t [My MLM] Been Shut Down by the Authorities?
  10. Bridge School Concert - I'm excited to go the Bridge School Benefit for the second year in a row. The $52 lawn seat includes the following acts: Tony Bennett, Dave Mathews, Arcade Fire, Foo Fighters, Eddie Vedder, Carlos Santana, Beck, Mumford & Sons, Neil Young. I'd pay that for the historical significance of seeing Tony Bennett and Carlos Santana, but the alt. rock acts are really my style. The only surprise is that they aren't getting Paramore to jump parachute in with their instruments. There's always hope for next year.

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9 Responses to “Ten Things I Think I Think (and Personal Finance Links)”

  1. I think one reason why people compare SS to a Ponzi scheme is that both work well as long as there is a pyramid shape intact. The bulge of the baby boomers caused the shape to move slightly toward a diamond shape, which would be a very bad thing.

    While SS is not an actual Ponzi scheme, it has the same risk of failure when there’s a lack of sufficient fresh blood in the system. Ponzi schemes obviously have the additional risk of failure due to the operator stealing all the money.

  2. Lazy Man says:

    I agree with that last paragraph, but as long as it exists, there will be people paying into it. The key is to match up the payments in to the payments out. In a Ponzi Scheme there’s is no effort to do this.

  3. “I agree with that last paragraph, but as long as it exists, there will be people paying into it.”

    You mean to say that as long as people are working, there will be people paying into it :)

  4. phr3dly says:

    If Krugman, Friedman, and Samuelson all agree that SS looks like a Ponzi scheme, well.. I look forward to your debunking I guess.

    http://marginalrevolution.com/marginalrevolution/2011/09/is-social-security-a-ponzi-scheme.html

    You are correct, and many (though not all) will agree that SS is not /technically/ a Ponzi scheme, in part because participation is mandatory. Thus the government can force it to remain solvent by boosting contributions from future participants.

    For reference, here’s the first two paragraphs of wikipedia’s definition of Ponzi Scheme:

    A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.

    The system is destined to collapse because the earnings, if any, are less than the payments to investors. Usually, the scheme is interrupted by legal authorities before it collapses because a Ponzi scheme is suspected or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.

  5. Lazy Man says:

    Thanks for the link phr3dly,

    I think you make a great point that it can be kept solvent by limiting payments and boosting contributions from future participants. I know that sounds like insolvent scheme, but the idea with Social Security is to keep that balance in place. A Ponzi Scheme has never had the intention of paying out what is paid into it. I think that’s a key differentiator. Someone showing that Social Security is a Ponzi Scheme should have to show that intention.

    Paul Samuelson and his quote from 1967 (based on his paper from 1958) seemed to predict the problem Social Security is in now – a situation where the payments in do not balance with the payments out. What may have seemed like a Ponzi Scheme in 1958 (or 1967) is not necessarily true today and will not necessarily be true ten years from now.

    Paul Krugman (from that same link) wrote, “Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in.” This to me says that Social Security is getting close to what I would presume is one of its intended goals. Krugman here is saying that while things were unbalanced in the past it is on its way to being balanced. As for it being unbalanced, it’s not a secret why, fewer baby boomers are going to paying in. The same people are living longer and collecting more than anticipated.

    I would agree with the quote of the author at that link and (I’m going to yada-yada-yada with ellipsis the parts that I don’t agree with), “Social Security is not necessarily a Ponzi scheme.. The Ponzi-like aspects are now over and social security is turning into what is essentially a forced savings… program.” I would qualify that quote by explaining that the “Ponzi-like aspects” were not created by Social Security, but by real world people.

  6. I think SS may look like a ponzi scheme but the fact that everyone pays into it and everyone gets paid by it and the ‘owners’ of it aren’t taking all of the money, makes it not a Ponzi scheme.

    Ponzi’s are always ran by a person who ends up stealing the majority of the money, when things become unstable.

    Ponzi’s also pay out extreme dividends to those who were first brought into the scheme. The fact that I’ll probably get 75% of what I put in by the time I retire tells me the system needs a little work.

  7. phr3dly says:

    “Ponzi’s are always ran by a person who ends up stealing the majority of the money, when things become unstable.”

    I hate to point out, but SS has no money in it. It’s all been spent by the government, with IOUs put in its place. Except that the same people spending the money control exactly how the IOUs are structured. Maybe that’s not “stealing”, but only because the guys in charge of the system are also making the rules. Any non-governmental entity that tried this would be severely disciplined.

    “Ponzi’s also pay out extreme dividends to those who were first brought into the scheme. The fact that I’ll probably get 75% of what I put in by the time I retire tells me the system needs a little work.”

    The early entrants into SS did get extreme dividends, and younger workers today will likely receive a severely reduced payout. Most of my peers approach retirement planning assuming SS will not exist, because its state in 30-35 years is entirely unknown.

  8. Evan says:

    I mean just look at the SSA’s own “attempt” at distinguishing it from a ponzi:

    “In this context, it would be most accurate to describe Social Security as a transfer payment–transferring income from the generation of workers to the generation of retirees–with the promise that when current workers retire, there will be another generation of workers behind them who will be the source of their Social Security retirement payments. So you could say that Social Security is a transfer payment, but it is not a pyramid scheme. There is a huge difference between the two, and only a superficial similarity.”

    http://www.ssa.gov/history/ponzi.htm

    IT IS THE SAME THING!
    I am paying into it because there is a promise that eventually I’ll get mine and that amount is likely to be more than the amount I put in.

  9. humiliated says:

    So glad you said something Lazy. I am Canadian and Bachmann & Perry (mostly Bachmann) embarass me for existing in the same quadrant of the planet.

    I can’t believe Bachmann is even being taken seriously. She is a “really not that funny” joke and her “Pastor” husband is repulsive, spewing his venomous, anti-gay agenda to anyone that will listen, mostly Bachmann supporters.

    I must say it is entertaining watching the dog and pony show that is the American election campaign!! It is like secretly watching an episode of Jerry Springer!

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