Money Monday: Largest Ponzi Scheme in History

Money Monday

Largest Ponzi Scheme in History!

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation (Wikipedia).

Essentially investor A is paid "returns" from investor B. There is no actual investment, and new investors are required to pay fictional returns to previous investors. Eventual the number of new investors is insufficient to pay the returns to previous investors. The Ponzi Scheme implodes.

So Called Largest Ponzi Scheme

Bernard Lawrence "Bernie" Madoff, born April 29, 1938, is a former American businessman, stockbroker, investment advisor, and financier. He is the former non-executive chairman of the NASDAQ stock market, and the admitted operator of a Ponzi scheme that is considered to be the largest financial fraud in U.S. history. The amount missing from client accounts, including fabricated gains, was almost $65 billion. The court-appointed trustee estimated actual losses to investors of $18 billion (Wiki).

The U.S. Government spends a ton of money. I mean trillions! That money enters the economy in the form of wages or profit and is taxed. That tax income is used by the federal government as further spending. As the money moves through the system, without private sector growth, the tax income shrinks and the government is forced to used borrowed money to continue the ponzi scheme. At this point the scheme can only continue while the public accepts the increase in government debt and taxation.

The United States Government IS the Largest Ponzi Scheme in world history. In 2011, the U.S. Government received about $2.56 trillion in tax revenue spent (paid out) $3.83 trillion! That means that the U.S. Government expects to show it's investors almost 50% returns that are completely, 100% fake. Fabricated from thin air, the U.S. Government will pay earnings from additional investors investments (ie more taxes) (wiki).

How Long Can It Continue?

The U.S. Government has an interesting and unique position that it can print it's own money, and that it's currency is the world standard or reserve. This allows the U.S. Government the ability to pay fabricated gains with printed money as well as new investor deposits (tax income). This allows the U.S. and the Federal Reserve (not a part of the gov't) to propagate and continue the ponzi scheme as long as the world accepts it. Government spending is already 1/4 of U.S. GDP and will continue to grow until the Ponzi scheme is stopped and or exposed.

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