I have thought this for a long time....others apparently agree. Is Social Security a Ponzi Scheme? By David Skarica Q: Recently, Bernie Madoff was given credit for running the largest Ponzi scheme ever operated. But in fact, isn't our Social Security system nothing more than a large Ponzi scheme that has been raided many times over the years, diverting funds from the rightful owner, the taxpayer, into programs benefiting politicians? If it is illegal for individuals to fraudulently represent our investments, why do we let our government do the same? Is this just another example of the dual system of justice perpetuated by our politicians? A: The definition of a Ponzi scheme is one where the money that comes into the scheme goes to pay out investors who are cashing in. As Social Security is a pay-as-you-go system, draw your own conclusions, but it could fit the bill.