Friday, August 3, 2007


Ponzi Scheme is named after Charles Ponzi who cheated people in the circa 1920s through a method, involves getting people to invest in something for a guaranteed rate of return and using the money of later investors to pay off the earlier ones.
Does anyone really make money from these schemes.The people who start it and the people who get into the scheme early. They must, or they would have died off long ago because they are the one who advertise by word of mouth.
How? If I start the scheme, I just skim off the top and pay off enough people to make it look like it's working, even if that means buying in again at the bottom. I might even be stupid enough to think that I can keep the scheme going when the recruiting has dried up. I can try to get money quickly by some other scheme.
For example, I can take a big chunk of money and go to Multi Level Marketing(International MLM for instance)with lots of slots and hope to hit it by cycling out fast but with time it will starts to fail because it gets so wide,and i cant keep up. What happens then?
I don't know how many people have lost money investing in Ponzi but thousands of people with little opportunity for investment of capital were swindled by pyramid scheme operators.Some People have invested their life savings or money they earned working abroad in one of several outlawed pyramid schemes like the ones we have in Nigeria, i dont want to mention any company.
This schemes offers very high Pay offs, with the first investors paid from later investors' deposits. They will eventually fail when no new investors come in and no cash to pay them then they start by cutting returns and then when things gets too tight then pack up and disappear. Any such scheme is doomed to fail because there cannot be an endless line of "investors." The only problem is that greed and self-deception are endless.

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