Ponzi scheme

A Ponzi scheme is a confidence game or financial fraud, named after Charles Ponzi, a flamboyant Boston man who swindled thousands of people in 1919-20, and went to prison for it.

The schemer offers very high returns, using a winning personality that overcomes the reluctance of investors. Supposedly the schemer has a secret sure-fire technique for making money legitimately; everyone assumes he is honest. The first and second rounds of investors put in money, and the first round gets large returns as promised; word spreads. The money given to the people in the first round comes from the second round investors. Then the money from the third round investors is used to pay off the first and second round. The money from the fourth round--assuming it lasts that long, is used to pay off the first, second and third groups. The supposed genuine investments never took place. The scheme continues as long as more and more people flock to invest. Ponzi schemes typically collapse after a few rounds.

By far the largest Ponzi scheme was discovered in December 2008, when it appeared that well-respected New York City financier Bernard L. Madoff had bilked investors worldwide out of vast sums, perhaps as much as $50 billion over a period of decades. Madoff was sentenced to 150 years in prison in June 2009. Another large scheme involving $7 billion resulted in R. Allen Stanford being sentenced to 110 years in prison in June 2012.

State and federal offices are supposed to be watchdog agencies, but the federal Securities and Exchange Commission ignored numerous warnings that Madoff was running a Ponzi scheme.

Investors in the Madoff scheme paid taxes on their supposed "profits" (they may be able to recover some of the taxes for the last two years), and they can deduct their losses from their income taxes, so that they will recoup some of their losses. The many charities that lost money will not get any tax refunds because they do not pay any income taxes.

Quotes

• "Give me control of a nation's money and I care not who makes the laws." -- Mayer Amschel Rothschild of the Rothschild family

• "The one aim of these is world control by the creation of inextinguishable debt." - Henry Ford

• "Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants and debt is the money of slaves." -- Traditional

See Also

• American economic history
• Essay:Invest in tangibles - Economic preparedness
• Inflation versus Interest rates / Rate of return-Expected return
• Self-directed IRA and IRA, 401(k), Roth IRA, 403(b), Retirement, Social security

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• Banksters: Elitist Quantitative easing of the Federal Reserve Bank, MF Global, Goldman Sachs, AIG, Rothschild family, Bernie Madoff, Dianne Feinstein

• National Debt: Debt Ceiling-Deficit spending and the Federal Reserve System's Ponzi scheme of Quantitative easing-Debt monetization devaluation of Fiat currency through Money supply-Treasury bills bought mostly by China and Japan

• Globalization-Globalism: United Nations, International Monetary Fund, World Bank

• Lliberal Keynesian economics: John Maynard Keynes and Fabian Socialist influence on Barack Obama

• Big Government: Liberal ObamaCare-Common Core-Social Security Welfare state leads to Nanny state, leads to Gun control, Militarization of police, Asset forfeiture and Domestic mass surveillance of law-abiding citizens via the Police state: Globalist-United Nations-Statist-Socialist-National Socialist-Communist

Contrast with:

• Fiscal conservatism: Ludwig von Mises' conservative libertarian Austrian economics and Capitalist Conservative economic policies of Ron Paul

• Gold standard and precious metals (silver) and gold)

• Invest in tangibles for Economic preparedness

• Limited government: Conservative values/Traditional values - Modern conservatism - Modern preparedness, Capitalism and Free enterprise are the original American Patriot Founding Fathers' values

• Modern preparedness: "if times get tough, or even if then don't", Debt is financial cancer, Tax is theft, Renewable energy, Financial security, You are in control of your life

• • Invest in tangibles: Rural farm land, Tools, Food storage, Precious Metals, Copper-jacketed lead and Firearms

• • Agriculture-Permaculture-Gardening]: Growing your own food, Food storage and Water storage

External links

• Alex Berenson, "With Madoff, Even Winners May Lose Out," New York Times Dec. 18, 2008
• "Ponzi Schemes," New York Times Dec. 18, 2008
• Lynnley Browning, "Tax Deductions for Theft Losses Could Help Some Investors," New York Times Dec. 18, 2008