Ponzi, Madoff, and One Other Example
Charles Ponzi was an Italian immigrant to the United States at the turn of the Twentieth Century. In the twenties, he went from zero to millionaire by running a financial con-game that has since been known by the name a “Ponzi Scheme.” Basically, a Ponzi scheme tells investors that it can take their investments and return huge earnings in a short period of time. Instead of earning those profits through economic means, the first pay-outs are made using further investments from newer customers. As human nature is so predictable in get-rich-quick situations, most investors can be counted on to not cash out, but continue to re-invest and even invest more as more good reports continue to pour in.
This is the same basic scheme the Bernard Madoff just went to jail for for the rest of his life. He has been said to have run the largest Ponzi scheme in history. However, that is not true.
Anyone think of another, larger Ponzi scheme out there? Think of an “investment” scheme where people invest money for years and years into a fund that guarantees a certain rate of return. When pay-outs come, however, they are made not from the investments and earnings of the investor, but from monies invested by other contributors. In fact, just as Madoff and Ponzi did, the money invested is never really there or invested in anything, but spent by the people running the fund for other things. The whole account is basically full of I.O.U.s
The worst part of this giant, obscene Ponzi scheme is that nearly every single person working in the United States is forced by law to contribute to this fund.
This is the same basic scheme the Bernard Madoff just went to jail for for the rest of his life. He has been said to have run the largest Ponzi scheme in history. However, that is not true.
Anyone think of another, larger Ponzi scheme out there? Think of an “investment” scheme where people invest money for years and years into a fund that guarantees a certain rate of return. When pay-outs come, however, they are made not from the investments and earnings of the investor, but from monies invested by other contributors. In fact, just as Madoff and Ponzi did, the money invested is never really there or invested in anything, but spent by the people running the fund for other things. The whole account is basically full of I.O.U.s
The worst part of this giant, obscene Ponzi scheme is that nearly every single person working in the United States is forced by law to contribute to this fund.
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