Saturday, April 25, 2009

On Ponzi Schemes and You


~ from the Securities and Exchange Commission Site.....

....Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period—and this was 1921! Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons. Decades later, the Ponzi scheme continues to work on the "rob-Peter-to-pay-Paul" [emphasis added] principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.


Regarding that last part, "Robbing Peter to Pay Paul". Perhaps it would be a good use of time to go back and read the above while considering the recent "bail-outs," and the schemes of social security, universal health care, children's health insurance, welfare, free education, food stamps, set-asides, immigration "reform", global warming, carbon taxation, save the hungry, feed the whales, aid to Africa, aid to China, be kind to trees movements, and a host of other programs/causes.

Great schemes - all designed to "reach across the aisle" so as to get money out of your pocket and into somebody elses - and also to wrest control from YOU and install it elsewhere. But then, that is OK as long as, in the end, I am able to get more of "mine" at your expense, than you are able to get of "yours" at mine.

No comments: