Kirk:  Well, duh Bob!   Spending the money and using new funds to pay off current investors who wanted to take funds out is EXACTLY what Bernie Madoff did with the money people gave him to invest!  The Securities and Exchange Commission say the following about Ponzi schemes:

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

Why do Ponzi schemes collapse?  With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.

Obviously, the US government has no legitimate earnings other than taxes it collects.  If all the workers leave or stop working, then there is no flow of funds to pay off Treasury and Social Security debt including what is supposed to be in the "lock box."  The "IOU Lock box" many talk about is really just another form of US Treasury debt.  

Compare the Social Security lock box promises with a pension fund that makes investments in stocks in OTHER companies and bonds to pay workers who retire.  One of the biggest is CALPERS, the California Public Employees Pension System.  CALPERS makes investments in stocks, bond, real estate, hedge funds, TIPS etc.  The idea is CALPERS is fully funded so taxpayers in California are not responsible for the retirement of its workers unless CALPERS comes up short.  See CalPERS Asset Allocation Ratio and Target Annual Return .  Compare that to Social Security and it is easy to see why so many call SS a Ponzi scheme.

Finally, liberal Nobel Prize winning economist, Paul Krugman, called Social Security a "Ponzi Game" here.

"Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. 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 (and today's young may well get less than they put in)."

DK:   Some states have issued warnings to investors to exercise caution about companies offering opportunities to invest in the Iraqi dinar.  Here is one such warning last month from the Wisconsin Department of Financial Institutions:  http://tinyurl.com/42ynds4

Kirk:  Scammers will always take advantage of investors seeking better returns.  Some people never learn that risk usually goes up much faster than return.  I've managed to avoid most scams by asking myself "if this was such a good investment, then why doesn't Warren Buffett or a big bank like Bank of America make this investment rather than make 15-year home loans at 3.5% or less?"  The latest I heard about was someone trying to recommend 9% CDs in Panama on one of my blogs!   We wrote a warning about it in the Alternative Investments under COACECSS Panama Savings and Credit Cooperative .  We may have to add "Iraqi Dinar" to that list of "alternative investments" we warn about.  

Of course, the market is now at 1292, a couple of percent higher than when that call came in at the end of June. So this is what happens. If that individual would have sold out at 1270 at that time, he would be faced now with either sitting it out or re-entering at a higher level.

Kirk:   I am sure glad I wasn't 100% in stocks at the top like Bob Brinker!  I lowered my asset allocation to equities just before the market top.  This gave me plenty of funds to send ten (10) different buy alerts to my subscribers announcing portfolio purchases in August with the majority very near the lows for the month.  I usually only have one or two explore portfolio changes a month but August was a special opportunity to get many good stocks well off their recent highs.  Some have yields over 4% too!