Wednesday, February 4, 2009

The Emperor's New Economic Stimulus Package (Part 6)

A Ponzi Scheme is a fraudulent investment operation that pays returns to investors either from their own money or from the money of future investors rather than from any profit seen by the investment itself.  A Ponzi scheme will often offer (or promise) very high short term returns in order to entice investors.  The scheme, however, is destined to eventually collapse because any earnings from the scheme (if any) will be less than the amount of the investments.  Very often these schemes are interrupted by legal authorities before the scheme collapses because often the promotors are selling unregistered securities.  As more investors become involved, the attention of authorities increases.

Let's take a hypothetical example...

Suppose there is this guy, let's call him "Obamy", and he wants to use a trillion dollars to go to a variety of personal pet projects that will make him powerful and popular.  But this "investment" has no real hope of actually accomplishing what it is purported to do.  How might he pull this off?  

Let's say he promises each "investor" a $1,200 or $600 return up front (depending on their investment).  In fact some of these "investors" don't even have to invest their own money ... they'll just ride out the scheme using other people's money.   "Obamy" never talks about what the scheme will cost in the long run, who will pay for it or how it will be paid for.  He only mentions the return.  He only mentions that within a few months or a few years at most, this scheme will pay back the investors multiple trillions of dollars.  Of course, no one who is "in on it" really believes that will happen, but that's what the investors will be told.

How long do you suppose it would be before the government shuts down this scheme designed to clean out its investors for the benefit of the few? 

... don't hold your breath.

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This blog is about my opinions and world view.  I am a conservative, evangelical Christian.  Generally speaking, if you post a comment, I'll allow you to express your view.  However, if you say something hateful, untruthful, or just generally something I don't like, I may remove it.

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