Ponzi Schemes Multiply On YouTube

Hugh Pickens writes "While it's probably not true that P. T. Barnum was the originator of the saying 'there's a sucker born every minute,' the proliferation of nearly 23,000 Ponzi schemes on YouTube, with an astounding 59,192,963 views, proves that the sentiment is still alive and well. The videos usually don't ask for money directly, but send viewers to web sites where they are urged to sign up for the 'gifting program,' usually for fees ranging from $150 to $5,000. One of the videos recently added on YouTube featured Bible quotes, pictures of stacks of money and a testimonial from a man who said he not only got rich from cash gifting, but also found true happiness and lost 35 pounds. 'They make it seem like it's legal and an easy way to make money, but it's nothing more than a pyramid scheme,' says Better Business Bureau spokeswoman Alison Southwick. Some of the videos claim that because it's 'gifting,' it's somehow legal. 'They talk about "cash leveraging," whatever that means, and other vague marketing talk,' says Southwick, but the basic scheme is that participants are told to recruit more people who will put in more money. 'It's just money changing hands,' says Southwick, 'and it always goes to people at the top of the pyramid.' A spokesman for YouTube, which is owned by Google Inc., said the company doesn't comment on individual videos."

Comments

They learned it by watching the government.

[Rockoon]

Just as the government learned it by watching Ponzi, these youtubers learned it by watching the government.

Re:They learned it by watching the government.

[RyuuzakiTetsuya]

Right, because taxation never produces libraries, public roads, schools, an FDA, FCC, or any number of other services.

All taxation does is make a handful of oligarchs rich, right?

Re:They learned it by watching the government.

[Nitage]

He might be talking about Social Security - which relies on more people paying in than taking out and will crash and burn horribly if the population stops growing fast enough.

Re:They learned it by watching the government.

[patro]

Right, because taxation never produces libraries, public roads, schools, an FDA, FCC, or any number of other services.

All taxation does is make a handful of oligarchs rich, right?

The question is how much more roads, schools, libraries, etc. we'd have if the gov didn't take the money from the people and spend it wastefully.

The current system does produce good things, but one can argue it produces more bad than good.

Re:They learned it by watching the government.

[dangitman]

The current system does produce good things, but one can argue it produces more bad than good.

OK, well let's see that argument, then. It's not much good saying that one "could" argue something, without seeing the specifics.

Re:They learned it by watching the government.

[patro]

OK, well let's see that argument, then. It's not much good saying that one "could" argue something, without seeing the specifics.

Recommended reading: http://mises.org/articles.aspx

Re:They learned it by watching the government.

[thetoadwarrior]

Taxes are abused like cigarette tax money going towards roads rather than health care as we were told it would. I doubt most of our money goes where it was supposed to go. For that reason alone we should stop paying until they stop treating us like a source of unlimited money.

Re:They learned it by watching the government.

[dangitman]

So, you're not actually willing to put forth an argument, but instead lazily link to an ideological website? I'm not quite sure you understand this whole "argument"' thing.

Re:They learned it by watching the government.

[clarkkent09]

Google HYIP:

http://www.google.com/search?q=hyip

There is a whole parallel universe of ponzi schemes out there. Big deal that it's on youtube.

Disclaimer: If you find yourself thinking about investing in one of those shoot yourself in the head immediately

Re:They learned it by watching the government.

[cayenne8]

"Well the population will surely stop growing if you let people die in the street won't it? Good alternative plan you have there."

Well, considering that most people on Social Security are well past their reproductive years, it won't keep them from adding to the population.

I'm heavily against govt. (especially the feds) spending on things which it is not constitutionally mandated to do, but, even I see some need for a very, very basic social safety net for the elderly and infirmed. However, the ponzi scheme that is the SS program, isn't what I'd like to see. It is going to go bankrupt in a few years. Likely when I retire, it will not exist I fear. It really sucks that I have paid all this fuckin' money into a black hole, which will not come back to me. Frankly, even at this last point, if the govt. would let me, I'd sign away any 'rights' I have to collect SS, if they'd let me OUT of the program at this point, and let me keep and invest my money on my own.

Re:They learned it by watching the government.

[UncleWilly]

However, the ponzi scheme that is the SS program, isn't what I'd like to see. It is going to go bankrupt in a few years.

If you really believe this your retirement should include lots of ammunition.

Re:They learned it by watching the government.

[Nitage]

I didn't suggest that we let people die in the streets. I only pointed out that social security is a pyramid scheme; money paid in isn't invested - it's used to pay people who invested previously.

Re:They learned it by watching the government.

[Rockoon]

It isnt just social security...

The national debt is now over 11 trillion dollars and there hasn't been a real budget surplus since 1969.

The federal government has borrowed money and can not pay the prior lenders back, so they borrow more money in order to do so. This has been going on for so long that only a few people still recognize it as an active ponzi scheme, as is evident by the ignorant people modding my post as a troll.

The interest payments on the debt will crest half a trillion dollars this year, and will be over a trillion/year by the time Obama's 1st term is up. The government will likely borrow more from social security (why not? its doomed anyways) in order to pay off prior lenders as it becomes more and more difficult to find new lenders.

There are other areas where the government is actively ponzi as well, such as medicare (medicare is a bigger problem than social security.)

Check out (U.S. Government Accounting Office) http://www.gao.gov/cghome/d08446cg.pdf to see how grim the pyramid really is.

It wont be possible to take down the pyramids through force (taxation at gunpoint) for much longer. If ponzi could have gone out and robbed some banks, he could have paid off all of his lenders. But imagine the point where even if he robbed every bank in the country he couldn't pay them off. America is pretty much there, right now, at the point of no return.

Re:They learned it by watching the government.

[PopeRatzo]

It is going to go bankrupt in a few years.

No, Social Security, if nothing at all is done, is going to be fine past the year 2041, according to the trustees report. That's not a "few years".

It could be fixed forever by doing one of two things; you could 'means test' so that rich people don't get full benefits, or (my preference) take off the cap on income that is taxed by SSA. That means, if you make a million bucks a year, you contribute based on all that income not just the first little bit. Of course, you wouldn't want to do both because that would be punitive against the rich and we all know how rough the rich have it these days.

The notion that Social Security will "go broke in a couple of years" is a huge lie perpetrated by people who would like to see the huge pot of SSA money be put into the stock market. I wonder how that would have worked out?

Re:They learned it by watching the government.

[Nitage]

It's not bullshit and it's not conservative. It's just good economic sense. Social Security is a fund that uses new money to pay older commitments instead of investing it. A textbook definition of a Ponzi scheme. If Madoff does it it's a Ponzi scheme. If the federal government does it then it's still a Ponzi scheme.

Re:They learned it by watching the government.

[Anonymous Coward]

bullshit! It's also spent on completely unrelated programs.

Re:They learned it by watching the government.

[feepness]

If you really believe this your retirement should include lots of ammunition.

It won't technically go bankrupt. They will have lots and lots of dollars to pay it with. It's just more likely that the retirement age will be lifted, and benefits will be withered away by inflation.

So yes, we will all get something monthly out of SS, and we will all get to decide whether we want to see a matinee or get a burger with our stipend.

Re:They learned it by watching the government.

[Cathbard]

So because they are beyond reproduction years it's ok to let them die in the street? Nice type.

So you think the government can simply not pay money into pensions why? Too many pensioners? So the government will stop paying this growing segment of society? Don't they vote?

It's the private retirement funds that are screwed, that's why a govt funded one is vital. Maybe it's different where you live but here everybody votes and if the govt ever tried to stop pension payments they'd be out on their arse before the ink was dry on the bill.

Re:They learned it by watching the government.

[Golddess]

Actually, Nitage is accounting for the growth of the "product" (human babies). Nitage is saying that without the growth of the "product" (human babies), Social Security cannot work. No where does Nitage say that product production is on a decline, only stating that a decline in product production makes this not work.

Put another way, if more people leave the workforce than enter it, eventually the people entering will not be able to sustain the people leaving.

Re:They learned it by watching the government.

[Ihlosi]

Put another way, if more people leave the workforce than enter it, eventually the people entering will not be able to sustain the people leaving.

The argument fails to take changes in productivity into account.

Re:They learned it by watching the government.

[Jurily]

The question is how much more roads, schools, libraries, etc. we'd have if the gov didn't take the money from the people and spend it wastefully.

What's this obsession with libraries? Wouldn't it be better to keep the existing ones and do something Gutenberg project-like?

Re:They learned it by watching the government.

[LaughingCoder]

... a huge lie perpetrated by people who would like to see the huge pot of SSA money be put into the stock market. I wonder how that would have worked out?

You are in luck. This gentleman (a former deputy commissioner at the Social Security Administration) did just such an analysis. Hint: it turns out much better than you might have expected. http://www.forbes.com/forbes/2009/0413/022-stock-market-taxes-on-my-mind.html

Re:They learned it by watching the government.

[Antique Geekmeister]

Oh, my. My friend, I'm sure that "pyramid schemes" of various sorts go right back to the Egyptian pyramids, themselves. It seems ridiculous to assume that Mr. Ponzi invented it completely from scratch, although he did refine it considerably. Getting the lower economic classes to pour money into a hierarchical structure is at the core of government, good and bad.

Re:They learned it by watching the government.

[Anonymous Coward]

The US is physically capable of saying "screw you, we're not paying you anything, our debt is $0 now" and may be forced to do something like that. Although the economic impact of such a decision would be catastrophic, as in catastrophic, not "if we let the banks die we'll go back to the stone age" catastrophic.

Re:They learned it by watching the government.

[Anonymous Coward]

Right. I recall Carnegie built a library. He probably wouldn't have, if the government had taken a larger percentage of his fortune.

Seems to me, when the government spends money on stuff which makes the wealthy richer, they don't complain about taxes. But when it takes money from the rich, holy h*ll, that's wasteful and stops progress!

Re:They learned it by watching the government.

[b4upoo]

Cry me a river Sophie! There is quite a chance that the national debt will mean nothing at all to any of us or our grand children. This is the old right wing scare tactic and nothing more.
              Companies dump debts constantly. It isn't as big a problem as the common man thinks. One way is to set up a shell company and sell bad paper to the shell company and then bankrupt the shell company. Just like a bad charge card debt for $10,000 is sold to a collection company for $5. and then the charge card folks turn about and claim a loss of $9995 on the account for tax purposes. Often the tax deduction is worth more than the $10,000 would ever be in the first place and it gives the charge card companies ammunition when the appear before co0ngress concerning sky high interest rates.
              In other words in the big end of the pond bad paper is often worth its weight in gold. I suspect that the US government can play a harder ball game than Master Charge don't you?

Re:They learned it by watching the government.

[T-Bone-T]

Of course it doesn't take productivity into account. How much you pay to SS is not related to performance.

Re:They learned it by watching the government.

[Rockoon]

You got it backwards.

Master Charge owns the debts of others
United States owes debts to others

See the difference? Its hard for the government to write off bad debt when its the one thats upside down.

..and whats this about a tax deduction? The solution to the problem of not enough tax revenue, you believe, is to reduce tax revenue further? Did you even think about it before you typed it?

..and whats this about right wingers? Did someone convinced you that this was a political idiology problem (with the 'right' being the 'enemy') rather than a fiscal numbers problem?

Re:They learned it by watching the government.

[leuk_he]

You only have to hide the small secret, like the youtube video's on pyramids. The big one (of trillions of dollars) are so big noone will believe them.

Re:They learned it by watching the government.

[cayenne8]

"It's the private retirement funds that are screwed, that's why a govt funded one is vital. Maybe it's different where you live but here everybody votes and if the govt ever tried to stop pension payments they'd be out on their arse before the ink was dry on the bill."

With the usage of the word "arse", I'd have to guess you are not an American.

I'm guessing Europe, UK?

It is just a different mentality, you are used to thinking of the large government 'nanny' state, where the state takes care of you from birth to death. Over here, we (at least we did) believe in personal resposibility, the individual, and taking care of your own.

During your working life, you are supposed to save for 'rainy' days, and retirement. In the constitution, the federal government, over here, is pretty much only supposed to be there for defense, and to be more or less, a mediation between the states, where the real power is supposed to reside.

However, that balance of power has slowly eroded over the years, and national programs and the like have come from the feds, which they really should not have the power to do or force upon citizens of each state. That's what myself and others are generally complaining about.

Many of us want to get back to the 'roots' of the US, and get rid of government mandated ponzi schemes (like SS). We don't want to go the way of Europe, and have a large, overbearing nanny state. As it has been said before, a government that is big and strong enough to give you everthing, is also big and strong enough to take everything from you too.

I'd rather be left to struggle more on my own, and be more free of govt. entanglements.

Re:They learned it by watching the government.

[drinkypoo]

Uh, is he assuming that the investments would be made the way they're supposed to be made? Because in practice the system would just turn into a means for funneling more taxpayer money directly into the coffers of the already incredibly wealthy. Invest, loot, company crashes, money is gone, adios Social Security. The only good that could come of this is that if the system crashed we might get enough riots to get some of these mansions full of pricks burned down.

Re:They learned it by watching the government.

[jabithew]

I don't know when, but at some point in the last few years wanting to have a balanced budget became the sure sign of a right-wing extremist.

The tax deduction only works for Master Charge, because it can take defaulted loans as losses, which then count against its income.

GP makes no sense. The US could simply refuse to pay off its debts, but to claim that this would have no consequence, or even be beneficial, is surreal. All of a sudden US treasuries, up till now the benchmark of safe investment, would be worthless. Investors would switch to safer euro-denominated bonds, probably from Germany. The markets would be awash with worthless dollars everyone wants to convert to euro. The dollar would collapse. China might start cutting its losses, accelerating the process. The euro would become the global reserve currency, assuming that European economies weren't too hammered for it to switch elsewhere.

The status quo, allowing America to effectively raise cash on its own terms, would be destroyed, and the American public would have to learn to deal with difficult terms of debt like the rest of us.

So yeah, good luck with that.

Re:They learned it by watching the government.

[Gilmoure]

Actually, it's borrowed on by the U.S. gov't with some token amount of interest on the loan (some kind of bond arrangement). Now, if the gov't was to default on these bonds that it owes to itself, yeah, that would be kinda' bad.

Re:They learned it by watching the government.

[Golddess]

Well, more income == more money going into SS, so if we assume that more productive == more income...

To Ihlosi, I ignored that for a reason, as it was only meant to be a general statement. I have neither the time nor knowledge to determine an exact equation for figuring out something along the lines of "as long as the people entering the workforce continually earn x% more per day/week/year, the workforce can suffer a decline of y% in worker population and still be able to sustain a z% increase of the population of people who have left the workforce".

But you're more than welcome to try.

Re:They learned it by watching the government.

[Dragonslicer]

I don't know when, but at some point in the last few years wanting to have a balanced budget became the sure sign of a right-wing extremist

Too bad the last 8 years of what could be called "right-wing extremists" weren't even close to a balanced budget. I'd say it's more like wanting a balanced budget has become the sure sign of a politician that's doomed to lose their next reelection campaign because they haven't done enough pandering to their overlords.

Re:They learned it by watching the government.

[daem0n1x]

I fail to see how this comment is troll or flamebait. Guess "moderation" means more like "censorship" to some. Please read the moderation guidelines.

Re:They learned it by watching the government.

[Anonymous Coward]

Nice how you slipped in there "Obama's first term", as if Obama (who has only been in office for what, 3-4 months now?). How was that national debt doing for the past 8 years of Republican rule?

Huh, it got a hell of a lot worse with Republicans in office?

I don't get it, I'm sure there's some way we can pretend it's the liberals' fault, right?

Re:They learned it by watching the government.

[Dragonslicer]

The question is how much more roads

Probably a lot more, but they'd all be toll roads and you'd have four different companies fighting to build four different roads to the same place.

schools, libraries

Schools and libraries are a tough argument. Education is the great equalizer for children of differing economic backgrounds. Competition among private schools has the potential to greatly increase the quality of the schools, but it also has the potential to destroy the only equalizing force that many poor children have. Which outcome is more likely is difficult to predict.

Re:They learned it by watching the government.

[Cathbard]

Australia actually. Over here we have always had a "look after the underdog" mentality and don't think it's right to throw people to the wolves simply because they didn't have the ability to get rich. Personally I am glad that is the case, I find the "make money or die" perspective quite obscene, not everybody has the ability or aptitude to make money and that has no bearing on their worth to society. In fact I know lots of musicians and artists that did their best work while on the dole (unemployment benefits) and enriched us all. I also know several people on welfare that do great charity work. Making money is hardly a method of assigning worth imo and it certainly shouldn't decide whether a person lives or dies. But hey, I'm not an American, as you say, we think differently.

Re:They learned it by watching the government.

[Anonymous Coward]

I suggest we let people die in the streets.

Re:They learned it by watching the government.

[cayenne8]

"Australia actually. Over here we have always had a "look after the underdog" mentality and don't think it's right to throw people to the wolves simply because they didn't have the ability to get rich."

But I'm not arguing that everyone has to get rich or perish. Just work hard, and live within your means. That means you don't spend on luxuries (HDTV, cable, fine cars, good booze) till you've bought groceries, and put back money for retirement and general savings. The problem is, that largely people have come to expect the govt. to fund their retirment and take care of all the basics, while they go spend their money on 'fun' stuff as mentioned above. If they stayed at home and cooked...they'd not have the weight problems, and they'd save money, etc.

"In fact I know lots of musicians and artists that did their best work while on the dole (unemployment benefits) and enriched us all. I also know several people on welfare that do great charity work."

I love artists and what they do...I applaud people for doing charity work. However, I don't feel it is my place to work hard, bust my ass to earn money, and then turn around and hand it over to people that are sitting around, doing 'fun' stuff like art and music. Hell, if I could be supported, I'd learn to play the guitar or paint or take more time to enjoy my writing. Unless you are good enough to sell your stuff, that is a HOBBY, it is not a livelyhood. Many charities hire people to work for them...no need to be on the 'dole' when you can work for a charity doing good deeds.

Again, no...not saying you have to get rich. But I don't believe in supporting people to have an easy life. I don't mind giving to the elderly, and the infirmed that cannot work. But, anyone that can work....should.

Re:They learned it by watching the government.

[vertinox]

See the difference? Its hard for the government to write off bad debt when its the one thats upside down.

That's ok. The US debt is backed by nuclear weapons, the IRS, and 2 million prisoners providing near free labor.

I'm trying to be funny, but I'm sort of serious. The fact that the USA can invade another nation with impunity to enforce its economic policies, use the IRS with impunity, and throw you into jail if you don't follow laws specifically created to create criminals makes the USD more valuable.

I'm mostly being pragmatic about the issue even though I don't agree with it. I mean, have you ever tried to pay the IRS in something over than US dollars. I don't think they will be happy with you. By the mere fact they force people to pay in USD means that it is made de facto valuable because you have to pay or face jail time.

Not being in jail is important to you, right? Therefore the USD is valuable to you.

Re:They learned it by watching the government.

[Dishevel]

So a person that believes in taking care of himself and expecting others to do the same is a backwoods gun toting anti "G-Men" Hick? If that is the case them maybe you should go eat some borscht Ivan.

Re:They learned it by watching the government.

[mshannon78660]

I don't completely disagree with you here, but I'm guessing you're younger than I am. Your philosophy of 'everyone who can work, should' is great when we have full employment - but in recessions and depressions, there simply are not jobs for all the people who want to work, or who should work. Those people are burning through the money they saved for a rainy day. And often, their joblessness has nothing whatsoever to do with their worth - they just happened to be working for the wrong company (one that either ceased to exist, or at least had to lay off large numbers of workers) at the wrong time (when unemployment rates are high, so competition for the very few openings there are is much greater than normal, and perhaps in the wrong place (we usually just hear about the national unemployment rate - often it's much higher in specific places - especially if the major employer in a region goes under). Personally, I've been fortunate in my life - but I can still remember the early 80s when, even though the town I lived in had relatively low unemployment (compared to the national average), when a chain restaurant would open in town, they would get 300-400 applicants to show up on one day for a job fair. All of those people were competing for about 30-40 jobs (and we're talking pretty low wage jobs, too). It was a college town, and the jokes about taxi drivers with PhDs had essentially come true - the cab companies required at least a bachelor's degree for applicants. Those are the reasons why we have a safety net like social security - you can absolutely be a solid worker who tries to save for your retirement, and be completely wiped out, close enough to retirement age that you can not possibly recover on your own. And if you're working at Wal-Mart, or some other similar wage job, good luck saving anything (especially with bank fees, since you won't have enough of a balance to avoid them) - most people at that wage level can't afford health insurance, so getting sick (or needing dental work, etc.) can easily wipe out anything they can manage to save.

Re:They learned it by watching the government.

[pentalive]

More income also means the price of goods and services goes up. Higher demand (because we have more money) = higher prices.

Re:They learned it by watching the government.

[Anpheus]

Actually it relies on the ratio of working people to retirees and the ratio of acceptable incomes between said groups.

Re:They learned it by watching the government.

[Cathbard]

But some people don't have the ability/aptitude to even make enough to subsist. These people do not deserve to die. About 90% of the wealth is owned by 10% of the population (or thereabouts); it's right and proper that they should relinquish some of that money they have hoarded to support the population that they have exploited with their greed.

And you also have to realise that VERY few people receiving welfare do it for extended periods of time if they don't have to. Welfare provides enough for basic needs like food and shelter (and we have a public health system), it isn't the conditions that many people will endure for long. The vast majority of people on welfare are on it because they need it and I do not begrudge them some quality of life just because I have to pay a couple of dollars in tax to do it. If that means a few people get to live in relative poverty willingly then so be it, I don't think they should die either. There will always be unemployed and there will always be some people that don't want to work and are willing to live on a bare subsistence wage. As one of our PM's once said - "we should marry these two groups together".

My example of musicians, artists and charity volunteers seems to have been completely lost on you. I was trying to demonstrate that there are many advantages of living in a compassionate society that aren't immediately obvious.

We look after each other over here. We just booted out an arsehole prime minister in a landslide election that was trying to dilute welfare and turn us into the US. You may remember him, Bush's last act was to give the little prick a medal. Good riddance to him.

Re:They learned it by watching the government.

[cayenne8]

I'm not all that young.

:)

Sure things are down, but, there ARE always jobs out there, just may not be ones you 'want'. Like you mentioned, PhD cab drivers...yes, it sucks, but, you gotta do what you can to put meat on the table. When things pick up, you can move back up to a better job.

Also, I think people need a mentality change. Job for life at a company has NOT been around for a long time, yet many people cling to that idea/ideal. Also, we are now in a very mobile society. Putting down roots for life, is possibly a thing of the past. You have to move to where the jobs are, or at least be willing to relocate, or if you can't sell your house....travel,and get on the road. Long commutes,, contracting gigs...etc.

When times are tough...you have to be willing to do what it takes. But much of your proposition was that if jobs go from your area, you are sunk. To me that tells me one thing...MOVE to a different area where there are jobs for your skillset. Is it pleasant? No...but, you gotta do what you gotta do. There are jobs to be had out there, but, my may have to move from NYC to GA or somewhere...and learn a different lifestyle.

Re:They learned it by watching the government.

[Hatta]

It is just a different mentality, you are used to thinking of the large government 'nanny' state, where the state takes care of you from birth to death. Over here, we (at least we did) believe in personal resposibility, the individual, and taking care of your own.

Not that the two are mutually exclusive. The best way for individuals to take care of themselves is for them to work together.

Re:They learned it by watching the government.

[Anonymous Coward]

Too bad the last 8 years of what could be called "right-wing extremists" weren't even close to a balanced budget.

An active Left has stamped a lot of different people with 'right-wing extremist' over the last few years. If you doubt the GPs assertion, find me a publicly recognised-as-leftwinger who has argued for a balanced budget (in the short term, not "in principle for the very long term") in the last 8 years.

Re:They learned it by watching the government.

[drewish_princess]

"Over here, we (at least we did) believe in personal resposibility, the individual, and taking care of your own."

I had to laugh at that. For the last sixty years the idea seems to have been take credit for the successes and blame the failures on bad luck then ask for a bailout.

Re:They learned it by watching the government.

[Anonymous Coward]

well, when you get down to it, there is a resemblance in the mentality.

the point here is that often the problem with people that get fooled by one of these schemes (ponzi, pyramid, capitalism whatever) is that it takes a good long time for them to face up to it. sometimes they will even move straight onto another.

so, the answer to the impending crisis that pure selfishness (capitalism) has created is... according to the libertarian school... more selfishness! hooray!

you see, it isn't the spirit of independence that has kept the West strong, that's crap. its the skill in using its advantages to steal wealth from other parts of the world, and some of its own people (not so necessary any more)

of course you need the coldblooded willingness to kill/enslave for that end, but if you're "looking after number 1" then you can justify just about anything if you think your survival is at risk, lets face it. especially if some fiendishly clever technology keeps you away from all the killing and the starvation. now that's one of the biggest advantages right there.

i'm not saying man hasn't always killed and exploited his fellow man, its just its so well enshrined in the incredibly sophisticated and fiendish system that we live in that... its at a qualitatively different level now. and it is past its sell by date.

apart from anything else its wrecking the planet, it breaks down periodically, causes wars, and just isn't very nice.

so, we can either go back to stone age with the libertarian mob or we can move in the opposite direction? to be honest i don't think we'll have a choice.

oh and you libertarians can still be antisocial pricks hiding in your parents' basement - the g men won't come for you a la ruby ridge! :)

Ivan

Re:They learned it by watching the government.

[cayenne8]

"But some people don't have the ability/aptitude to even make enough to subsist. "

Life is tough, always has been. In the past, people's families took care of the problems, not society as a whole. Again, if someone is infirmed, retarted, etc...or elderly and not able to work, I don't mind something to help them. But, if you can work, you work. No exceptions.

"And you also have to realise that VERY few people receiving welfare do it for extended periods of time if they don't have to. Welfare provides enough for basic needs like food and shelter (and we have a public health system), it isn't the conditions that many people will endure for long."

Well, your welfare must be much different than ours here in the US. You can go look at the projects (public housing) here in New Orleans where I live, and you can see not just a family living on the dole for a long time, but, entire generations of people living in them on welfare. They never get off!! They get welfare, and free medical care (medicare or medicade I forget which one), they get food stamps, etc. These people have generations of families that are on the taxpayer tit. Why should I support them? They need to get out of the vicious cycle of ignorance and laziness that this type of subsidized life encourages. I'd have much less problem with social programs like these if they were, in fact limited. YOu get 'x' amount of time on it....and hard deadline you are off on your own again. I think that is the only way people will learn.

"About 90% of the wealth is owned by 10% of the population (or thereabouts); it's right and proper that they should relinquish some of that money they have hoarded to support the population that they have exploited with their greed."

This was the main point I noticed in your last post. I just want to know...why am I having to relinquish my money, I certainly have not hoarded a great, vast amount. I've certainly not exploited anyone that I know of with my greed. And yet...."I" the middle class taxpayer am paying the vast majority of the way for these social entitlements.

By your reasoning, if I'm not wealthy, and not exploiting people, I should not have to pay, yet that is the way it is.

Re:They learned it by watching the government.

[cayenne8]

"oh and you libertarians can still be antisocial pricks hiding in your parents' basement - the g men won't come for you a la ruby ridge! :)

Ivan"

You're not quite as anonymous as you thought you were, Ivan

:)

Re:They learned it by watching the government.

[Maudib]

"The government will likely borrow more from social security (why not? its doomed anyways) in order to pay off prior lenders as it becomes more and more difficult to find new lenders."

Except that its actually exceptionally easy to find lenders. Currently treasuries are barely above a negative yield and buyers are lining up to get them and paying some of the highest prices ever to do so. If the market is willing to lend the U.S. Government gobs of money at what is essentially interest free right now, why shouldn't the government do so in order to pay off the older high interest debt? Seems both rational and responsible.

Your hysterical rhetoric obscures some other more relevant facts. Regardless of the total $ amount of the debt, as a percentage of GDP U.S. debt was actually MUCH higher in the 40s and 50s and current debts is roughly equivalent to where it was in 1990.

Re:They learned it by watching the government.

[Tarsir]

The US has a long tradition of individualism, which is great. Other countries, like my native Canada, have a tradition of mixing individualism with collectivism. Or what you would call a large overbearing nanny state. Obviously, you think collectivism is wrong for the US, but do you also think it is wrong for every other country on earth? Honest question.

Re:They learned it by watching the government.

[flameproof]

Aww, there's nothing wrong with taxation per se, so long as there is only ONE tax and it's small. Isn't taking the pork away the only real means of scaling back the government and making those in government "service" actually work for a living? (And if you happen to work in the gov and really do work, I don't mean you, I mean your boss. Ahh! Gotcha' there, didn't I?)

I don't mind rich people. Know some pretty nice ones, in fact. Wouldn't want to live that way myself - always worried about five cents on the dollar - bleh... Nonetheless, if government should have any power to regulate and restrain, it should be on that "1%" of the population that has the financial ability to advance their special interests as opposed to the other 99% who just want to get by and prosper moderately.

Youtube is fast becoming a moot media outlet, much as Rupert Murdoch's rebooted Myspace is. It doesn't matter who or what is to blame; things change, usually (but not always) for the worse. Look on it as the natural decay of democratic capitalism since that what a ponzi scheme actually is: "a fraudulent investment operation that pays returns to investors from their own money or money paid by subsequent investors rather than from any actual profit earned". If that doesn't describe the FED, I don't know what does.

I think Democratic Capitalism is fading into obsolescence now because people are just too savvy to the ways that corporations have been manipulating them psychologically for the last 50 years; pigeon-holing people into demographic, SRI VALS consumer groups, leading them by the nose via media and political outlets and the like. It's kind of humbling to realise that I've been part of that for the last 30 years... Corporations have taken over the administration of the Government, and quite frankly, people are growing tired of Nike, Coke, McDonald's, Microsoft and News Corp. making all the rules and telling us who we are, how and where to live and what we should eat, drink and wear.

It's great to live in a society of convenience, but not at the expense of my liberties. Losing those piecemeal has been the greatest inconvenience of all.

Re:They learned it by watching the government.

[Cathbard]

No, the really rich just need to pay a higher scale to cover it proportionally. I also said I don't mind paying a few dollars so you are certainly not accurately representing my logic at all.

If you have people happily living in relative poverty for generations then you have much deeper social problems there. But I suppose that is obvious. You have astronomical crime rates, still allow the state to murder criminals and allow poverty at a level not tolerated by the rest of the western world. Everybody that returns from visiting the US have said the same thing to me - the most enduring impression they had was that of extreme poverty with homeless people sick and dying in the street while others drive by in cars the size of small apartments. It certainly turned me off visiting there i can tell you.

You are still coming back to the same thing again and again and trying to dress it up as some twisted form of fair play - you think what is in your wallet is more important than having compassion for your fellow man. Quite frankly, I'm appalled. I find it quite distasteful. I really hope the coming economic storm tempers your attitude towards those less fortunate than yourself.

Re:They learned it by watching the government.

[Dragonslicer]

I didn't say the Democrats currently in the government are any better. My point was that the oft-called "right-wing extremists" (which I usually associate with religious or militaristic extremism, not economic libertarianism) in the Republican party of the last 8 years weren't good at balancing a budget. Both parties have gone for the same result, just with different overlords.

Re:They learned it by watching the government.

[Anonymous Coward]

Yeah, the problem is, what level of social safety is appropiate?

We've got here welfare recipients, that

-) do not work for a decade because they feel that they need to be a stay-home mummy.
-) welfare recipients that are sending their children to expensive schools.
-) drive expensive cars, because they work "black" on the side.
-) won't take a job that pays perhaps 200USD more than what they effectivly get. (And do not think you can force them to work, they'll start working but will be a continous drain on the employer. Filing away stuff wrongly. Ruining machines in a way that you cannot accuse them of intent, ...)

One could suggest that this means the subsidy is to high, but at the same time I know cases where people on the dole only survive with the help of the family or church charities.

Basically it's a question, who decides what one needs to live? How much nosiness do you want to allow? E.g. if two people live seperatly, they need more money. If they live together, they need less. That leads to situations where people on the dole in Germany do rent a second cheap flat, while living together, so that they can claim to live apart.

There are also political reasons to avoid a welfare state. The moment you get a budget to disperse, the people in charge of it will try and fight for it, no matter if it makes sense or not under changed conditions.

Re:They learned it by watching the government.

[logixoul]

The national debt is now over 11 trillion dollars and there hasn't been a real budget surplus since 1969.

Hi. I keep hearing about the huge US national debt but I don't understand what it means. Does it mean Americans are poor? Does it mean USA owes money to other countries but can't pay them back? If so, why are other countries not at war with the US? Does it mean officials have stolen tax money for themselves, making the government owe money to the people and business? Does it affect me? (I'm East European) Whose fault is it? Is this all related to the financial crisis? I feel like I'm the only one not getting this... Thanks in advance!

Re:They learned it by watching the government.

[cayenne8]

"You have astronomical crime rates, still allow the state to murder criminals and allow poverty at a level not tolerated by the rest of the western world. Everybody that returns from visiting the US have said the same thing to me - the most enduring impression they had was that of extreme poverty with homeless people sick and dying in the street while others drive by in cars the size of small apartments. It certainly turned me off visiting there i can tell you."

Not sure where you're getting your information man. Yes, some states do allow capitol punishment, personally, I don't have a problem with that. If some asshole is proven with a great amount of overwhelming evidence that he did something horrible, like raping, torturing and killing a kid, I would personally set up to volunteer to put a bullet in his head. But, that's another topic.

But, you speak of some kind of rampant poverty over here? Where in the hell did you get that?!??! Even our people in the US version of 'poverty' have it heads and tails better than what true poverty is in the rest of the world. I live in what is a VERY poor city, New Orleans, and while you do see some street people, you do NOT see people sick and dying in the streets. This isn't somewhere impoverished like Africa, or having people poor in the streets like India, which is what you are making it sound like. Truth be known, there isn't poverty here in the US like what real poverty is in the rest of the world. Does everyone here live in a mansion or own a home, no. But, you certainly have a chance in life here to get the things you want out of life. Equal opportunity != equal results, but, even the worst here in the US have it better than most of the world.

Again, I don't have anything against helping people who have fallen (through no fault of their own) on hard times, nor the elderly, nor the people who can't work due to illness, physical injury, etc. I don't, however, have any sympathy for those who are able bodied, and CAN work...but, choose not to.

And, while the economic problem here is bad...on our scale in the US of what is good and bad...it isn't THAT bad. We'll pull through it soon enough, just have to let the market correct itself, get housing prices back to normal, get people out of homes they shouldn't have been in in the first place, and get the credit market back to normal.

But, really.....can you give specific examples in the US where you have seen sick and dying people in the streets with cars driving by them???

Re:They learned it by watching the government.

[shutdown -p now]

The question is how much more roads, schools, libraries, etc. we'd have if the gov didn't take the money from the people and spend it wastefully.

The question isn't really "how much". The question is - who would actually be able to use those roads, schools, libraries etc (as they obviously wouldn't be free, and more likely than not would be pretty damn expensive).

Re:They learned it by watching the government.

[GrumblyStuff]

Privately funded FDA? I guess the closest thing would be like Consumer Reports.

Re:They learned it by watching the government.

[Cathbard]

Poverty is relative. you are comparing it to the third world, I am comparing it to the western world - are you part of the west or not?. There are overwhelming statistics involving people suffering in the US due to not being able to afford health insurance, rent or even food that you won't find in the rest of the western world (there may be some other western countries people could quote that are as bad but none that I know of). What we call poverty is not the same as what you call it. Here everybody is assured of enough money to live unless they are busted ripping off the system, the same is true in most of europe. Poverty in the US means not eating, no shelter and no healthcare; in most of the western world it means having just enough to eat, basic accomodation and public doctors - totally different level of poverty. I didn't say rampant, I said extreme; those two words have totally different meanings. Pointing at Africa to justify your appalling record is a strawman argument.

What you are proposing is throwing the baby out with the bath water - a small percentage of people will exploit welfare so let's deny it to everybody. You point the finger at some people that abuse the system and say to hell with everybody unless they are disabled. I repeat - I am appalled.

Re:They learned it by watching the government.

[cayenne8]

"Poverty in the US means not eating, no shelter and no healthcare;"

In the US, no one HAS to go hungry, or without shelter....there are charity (private, city and faith based) services that the homeless can go to. We actually had them refusing to go to these here in New Orleans, some of them are plain crazy...and just prefer to live on the street. But, if you really need it, shelter and food can be found. There are food banks that people donate to, so that those without can eat. Not everything has to be govt. based.

And, no one with an emergency will be turned away from a hospital. It is against the law to be refused tx at an ER.

You paint a far worse picture of the US than it is here. Trust me on this, 'cause I live in one of the poorest towns around, and it isn't that bad here as you paint it, not by a long shot.

While there are exceptions and outliers in every nation, and every system, I just have to emphasize, it is NOT that bad here as you try to spin it.

Re:They learned it by watching the government.

[Anonymous Coward]

Nice straw man argument, loser. You can have your nanny state.

Re:They learned it by watching the government.

[cayenne8]

"The US has a long tradition of individualism, which is great. Other countries, like my native Canada, have a tradition of mixing individualism with collectivism. Or what you would call a large overbearing nanny state. Obviously, you think collectivism is wrong for the US, but do you also think it is wrong for every other country on earth? Honest question."

Of course I have NO problem with how other countries want to live...if they want a nanny state, have fun.

I, and hopefully still majority of us in the US, do not want such a government.

But really, why would I care what another country does society wise?

Re:They learned it by watching the government.

[operagost]

This is why the left-right political ideology simply doesn't work. People called "W" a right-winger, when he greatly increased the size of government and added social programs like prescription benefits. Calling that "right wing" is simply childish. The idea of a government strength scale based on Aristotelian/Platonic ideas-- from anarchy, to democracy, to republicanism, to oligarchy, to totalitarianism-- is far more realistic and brings the M.O. of politicians into sharp focus.

Re:They learned it by watching the government.

[operagost]

What were you supposed to be arguing for, again? Unemployment benefits, or retirement benefits? If your argument is, "When you're out of work, it's tough," that's a no-brainer. I have been out of work, but using that fact to support an argument about government programs is simply an argument from authority. Maybe people shouldn't work at Wal-Mart stocking shelves their entire lives; I believe that as humans, we should strive to progress.

Re:They learned it by watching the government.

[operagost]

Everybody that returns from visiting the US have said the same thing to me - the most enduring impression they had was that of extreme poverty with homeless people sick and dying in the street while others drive by in cars the size of small apartments.

Those are pretty much lies, even the parts that weren't supposed to exaggerations. But I would like to note that those huge cities with all the homeless people are nearly all run by left-wing politicians who support the same social programs Europeans do.

Re:They learned it by watching the government.

[operagost]

You are simply out of your mind. In the USA, someone who is gravely ill or injured has a legal right to go to an emergency room and receive treatment. You have not been to the USA, and yet you try to tell us what it's like based on what some liar told you! I have been to New Orleans, New York, Philadelphia, Dallas, Boston, and other large cities and have yet to see a homeless person dying in the street. I commend cayenne for politely responding to your ridiculous arguments.

Re:They learned it by watching the government.

[operagost]

They're not free. Pay your school (or property) taxes, or lose your property. Pay the tolls, or be fined. The libraries are mostly created by rich benefactors, and continue on a combination of taxes and continued donations from the private sector.

Re:They learned it by watching the government.

[shutdown -p now]

Of course they aren't free. But at least government doesn't have to make them profitable, while a business would. Combining with efforts which, in a given area, can effectively be a monopoly, such as roads (due to the large barrier of entry), prices will skyrocket.

One good example of that is the U.S. medical industry, the private parts of which manage to be much more expensive than in countries with combined public/private medical care (so overall, U.S. citizens pay more in medicare taxes and private medical insurance than citizens of most other First World countries, for the given amount of healthcare).

Re:They learned it by watching the government.

[The_Wilschon]

You may be a troll or you may not, but I'll bite. The US federal government takes in a certain amount of money each year in taxes. It also pays out a certain amount of money each year in salaries, contracts, purchases of war material, simple handouts to the "deserving", etc, etc, etc. In nearly every year, it pays out more money than it takes in. In order to make up the difference, the government asks for billions of small long-term loans from anyone who will give them loans. This is more usually called selling bonds. You or anyone else can buy a bond from the US government, which means that you give a certain amount of money to the government, and they promise that after a certain amount of time (on the order of 10 years), they will give you your money back, plus some amount of extra interest (this is just like any loan). This extra income from bonds is enough to make up the difference between tax revenue and expenditures.

The end result of this is that the government owes money in small chunks to anyone who holds a bond. The sum total amount owed in bonds is the national debt. FWIW, nearly all governments in the world operate like this.

Some of it is in the hands of domestic individuals, some is in the hands of domestic corporations, some is in the hands of international or multinational corporations, some is the hands of US state or municipal, or foreign governments, some is in the hands of foreign individuals. The majority of the debt could be called in at any time, if the debtholders decided to call it in. This would be disastrous, so the major players wouldn't do it unless they thought they could somehow profit from worldwide economic chaos, and, in the case that the debtholder calling in a large chunk is a foreign government, likely war.

Having a national debt does give the government an extra way to affect the economy, by setting the interest rate on these bonds variously. See monetary policy. However, the debt need not be so precariously large in order to have an effective monetary policy.

Re:They learned it by watching the government.

[Anonymous Coward]

Social Security is *not* a Ponzi scheme. Not sure why people think this.

The records are public, they are audited, the mechanisms for how the money comes in and gets paid out are clear. It is not fraud. Think about it, please.

What Social Security *is* is a tax, a transfer of money from working people to retired people. It's okay to dislike a tax.

Re:They learned it by watching the government.

[Cathbard]

You are demonstrating nicely that the poor are more wretched there than here. If you are hungry you have to line up at a soup kitchen instead of eating sausages rather than steak, you need to use communal shelters instead of having money to pay the rent and you only get treated in emergencies. Maybe I was exaggerating a little for effect but it had the desired effect - you have just shown that your poverty IS more extreme - and that is the impression I was talking about. Your whole argument was calling for LESS social security. You want to make it harder for people at the very time that more people will be needing help. With that plan I'd be expecting a sharp increase in your already high crime rate.

Re:They learned it by watching the government.

[AP31R0N]

You're being modded as a troll because of the tone of your post, not because of the content.

Re:They learned it by watching the government.

[mshannon78660]

That was my point - there are not always jobs to be had out there. When the cab companies were requiring bachelor's degrees, where do you think the high school graduates went for jobs? When the unemployment rate is quoted at being, for example, 9%, that means that 9% of the workforce is out of a job, and actively looking for a new one. Once they get discouraged and stop looking, they are no longer counted as unemployed. Also, if they take a part-time job to pay the rent they are not counted as unemployed. Full employment is considered to be around 4.5-5% - which reflects the time it takes to find another job when there are jobs to be had. When it gets higher, it indicates that there are people who are not finding jobs, even though they are looking. As that number gets higher, the number of chronically unemployed or underemployed (the two categories I mentioned earlier) generally also go up - although those numbers are less widely reported. Also keep in mind when you talk about moving to find jobs - if those jobs have been moved out of the country, moving may not be an option. Many countries have far less liberal immigration laws than the US (at least as regards to US citizens), so you may not be able to follow those manufacturing jobs to Malaysia, for example. All I'm saying is that the government needs to provide those safety nets (social security, unemployment insurance, etc.). People can have their savings wiped out through no fault of their own, and be unable to rebuild those savings before retirement. I certainly think that people should save for their own retirement, and not rely on social security (I tell my financial planner to assume no social security) - but I still think it absolutely needs to be there.

Re:They learned it by watching the government.

[Tarsir]

I'm not sure why you would, but it sure seems like a lot of slashdotters think the rest of the world is some combination of naive, fearful, and entitled for not wanting, much less having, governments exactly like the US :P

"educate yourself! educate yourself!"

[RyuuzakiTetsuya]

...this is precisely why we really need to reconsider our public schooling system.

If we abolish forced schooling, and insist that people "educate themselves" They'll find one of these scams, get taken for an expensive ride, and then left dumbfounded as to what happened.

Solid critical thinking skills start with a decent education. Decent education starts by making it free, neutral and accessible.

Sign of the times

[VShael]

Just like during the Great Depression, this will be a time of resurgent con-men as the majority will (in desperation) try anything to get cash.

Legal if enough people believe it

[Rik Sweeney]

Some of the videos claim that because it's 'gifting,' it's somehow legal

Reminds me of that law software pirates invented so that they could copy games.

Re:Legal if enough people believe it

[DJRumpy]

Our congress receives 'gifts' all the time, and they never go to jail. Am I missing the point? ;)

Re:Legal if enough people believe it

[Anonymous Coward]

Some of the videos claim that because it's 'gifting,' it's somehow legal and this is true in the Republic of Ireland and in the UK where Women Empowering Women used this fact to evade the law.

Pedantry

[elvum]

Surely these are pyramid schemes rather than Ponzi schemes?

Re:Pedantry

[julesh]

Just what I was coming here to say. A ponzi scheme is an investment scheme where old investors are paid from the money invested by new investors, but don't know where the money is coming from. What's described is a classic pyramid scheme, where the participants (who can't be considered investors because they don't expect to get money back from the same place they sent it in the first place) get money directly from later participants. The schemes are similar, but not the same.

Re:Pedantry

[Anonymous Coward]

It's not that the author of the article doesn't understand these are pyramids, s/he doesn't recognize that Ponzi schemes aren't pyramid schemes.

Re:Pedantry

[Megane]

Except that the kind of people who fall for these are too stupid to know the difference, but a scheme named after a person, especially if it's been in the news lately, is more likely to stimulate a brain cell than one named after a pile of rocks. So you want to use the words "Ponzi scheme" with them.

Re:Pedantry

[elvum]

I'm inclined to think that the logical conclusion of that argument would be to call them "Madoff schemes"...

A fool and his money...

[onion2k]

The notion that you can "gift" (or "buy") your way to being rich without doing any hard work, or having a creative idea, is so completely stupid that anyone who believes it, assuming they're in full control of their mental faculties, deserves what they get.

Re:A fool and his money...

[SalaSSin]

deserves what they get.

What do you mean get? Then it does work???

Where's that website???

Re:A fool and his money...

[French31]

Sure we hate those idiots for believing in such a way to make money, but the worst guys remain the ones at the top of the scheme for earning money by exploiting people's credulity. Those crooks deserve to be jailed.

Re:A fool and his money...

[Anonymous Coward]

As a kid of the English aristocracy, I can with full confidence say that the richest people in this country have never done any hard work and have no more creative ideas than the average Slashdot poster.

As far as I can tell from the nouveau riche the family tends to mingle with, they might work harder than us but I've not met one who does "hard work" in the sense of toiling mentally or physically through almost every waking hour, as was pretty much obligatory for some classes over a century ago. And they certainly don't have creative ideas! they're mostly just middlemen who know how to appeal to a large volume of the lazy.

One of the great giggles of capitalism is that it produces a middle class the largest component of which only exists to support capitalist machinery - the re-sellers, the jesters in marketing, the accountants, the civil lawyers, etc.

Re:A fool and his money...

[dangitman]

The notion that you can "gift" (or "buy") your way to being rich without doing any hard work, or having a creative idea, is so completely stupid that anyone who believes it, assuming they're in full control of their mental faculties, deserves what they get.

But it does work. Plenty of people get rich from these schemes. Just not most people.

Re:A fool and his money...

[Hurricane78]

Well, banks work that way. And they were very successful for long times. But it works a bit different. Just take the money of people, and deposit it somewhere. Banks only have to keep between 3-10% of the cash available, in case, someone wans to get some of it back. So you can lend over 90% of that money to others. With a nice fat interest. From that interest you take a tiny part, and give it to the people that that money belongs to. The rest is free money for pretty much no work. (You can automate most it.)

The only problem is, that because you only gave out X dollars, but expect X+interest dollars back, which do not exist, because they were not given out in the fist place, someone always has to go bankrupt.
So you create an "economic crisis" every X years, where those people and banks lose their belongings, so the rest can still work in your system.
If you are good, you can even get "bailout" money, and get even richer. Just look a little sad and put your own money where they don't see it.

PROFIT!!!

Re:A fool and his money...

[American Terrorist]

I'd much rather be in marketing, accounting, or law than out in the rice paddies. Do you know why so many fewer people work in agriculture now than before? Science and technology. Who builds the tractors that harvest wheat? Engineers. Who sells them? Marketers. Who makes sure the crops aren't poisonous? Lawyers. Who exists solely for tabloid fodder? Aristocrats. Why do people still pay taxes to support the royal family? Other than increased tourism revenue, I have no idea.

Re:A fool and his money...

[Wildclaw]

The only problem is, that because you only gave out X dollars, but expect X+interest dollars back, which do not exist, because they were not given out in the fist place,

Not true. The thing you are missing is money circulation. I can easily pay back $10 with only a single dollar. As long as the one I am paying back to keeps buying services from me.

That doesn't mean that fractional reserve banking is problem free. The really problem occurs when you have people at the top who start accumulating money wanting to get richer and richer. In the scenario I described above, the one lending out the money has a huge amount of power, because if he doesn't pay enough from you, you won't be able to pay back the loan, and you will have to default. That is what happens in crashes.

But the worst happens before the crashes. As those people who has the money doesn't want the money to just sit still doing nothing, they "invest" it. But the problem is that most idiots on wall street and main street have no clue what a real investment is. An investment is spending money in something that gives real productive returns.

When money gets loaned out for non investments you get bubbles. Sometimes the bubble can be in a real type of goods that is used for speculation which drives up prices (housing). And sometimes it can be pure speculation that doesn't even involve any real productive stuff (stocks, derivates, financial papers, gold). But it will always crash.

Just a small note about gold. I prefer to group it with financial type speculation, because gold in general works far more like a currency than as a commodity. It simply have never had much real world usefulness compared to its cost. Its value lies purely in hedging against fear.

I do think that the current monetary system needs to be changed. But I am also sure that going back to the gold standard or just getting rid of fractional reserve banking without introducing anything else is a bad idea.

Re:A fool and his money...

[HungSoLow]

Isn't that how stocks work? You simply "buy" your way into wealth? Lends credence to the theory that capitalism is a pyramid scheme.

Re:A fool and his money...

[Dragonslicer]

The notion that you can "gift" (or "buy") your way to being rich without doing any hard work, or having a creative idea, is so completely stupid that anyone who believes it, assuming they're in full control of their mental faculties, deserves what they get.

Welcome to the modern music industry.

Re:A fool and his money...

[maxume]

If the price of the stock accurately reflects the underlying value of the stock, no, it isn't.

The nature of the stock market means that there is speculation that drives the price of the stock above that of the underlying value (for instance, people assume that a company will be able to double in size every 5 years, even though they control most of the market that they play in), and so there are similarities.

Re:A fool and his money...

[Raenex]

The notion that you can "gift" (or "buy") your way to being rich without doing any hard work, or having a creative idea, is so completely stupid that anyone who believes it, assuming they're in full control of their mental faculties, deserves what they get.

There are plenty of rich investors who do nothing but give money to creative and hard-working people who don't have money, in return for future profits.

Re:A fool and his money...

[manoftin]

It's rich for an intelligent man to say the stupid should suffer for being stupid. The (slightly) more intelligent man says - let's help the stupid not be abused.

Bah

[nrgy]

I don't care about getting rich or losing 35lbs, if the video says I'll get a free pocket fisherman just tell me where to enter my cc #

Ponzi != pyramid

[Anonymous Coward]

Isn't a Ponzi scheme different, in that you show a "return" on an investment using other investors' money in the hopes that they will keep investing in you, thereby allowing you to make it seem as if there is money being made.

In a pyramid scheme, you recruit X members who recruit X members each etc. At each level, you send some percentage of the money you receive up.

The main difference being that in a Ponzi scheme you are recruiting investors whereas in a pyramid scheme that task falls upon the suckers you convinced to give you money.

Also, according to Wikipedia, Ponzi schemes are easier to maintain for longer because you simply have to convince a large enough portion of your "investors" to reinvest, whereas the pyramid scheme relies on an exponentially increasing base of suckers.

Ponzi schemes also revolve around financial machinations to confuse people, whereas pyramid schemes, from my understanding, relate more on convincing people about buying into a "franchise" or something to that effect.

captcha: viruses

Re:Ponzi != pyramid

[parnasus]

I also believe one of the differences between Ponzi and Pyramid is how informed the participants are of their role in the organization:

Ponzi: Participants are investors. They are promised "above market" returns and are then shown other peoples money as proof of returns. They are then convinced it would be unwise to invest their money in less-optimal vehicles. Few investors remove funds, and those who do are paid in monies from the next batch of suckers^H^H^H^H^H^H^H^Hinvestors.

Pyramid: Participants are collaborators. You know you have to "recruit" other investors in order to make money on you investment, usually in the form of some commission or recruiting bonus. No real work is involved and no products are produced.

Realize these are gross generalizations and con-artists are very good at blurring the lines between categories and dreaming up new twists to the tried-and-true.

why would

[ionix5891]

google care? for each one of these videos they can bombard us with adsense adverts for more scams

Re:"educate yourself! educate yourself!"

[QuantumG]

You'd be surprised how quickly a sucker learns after his money is gone forever. Sounds like a cheap education to me.

You can't con an honest man....

[hattig]

The people that send off money (gifts, paying for "Get Rich Easily" books, whatever) are idiots, they were idiots 10, 20, 30 years ago for similar scams, and they'll be idiots in 10, 20, 30 years time in whatever variation comes to light then. I won't cry for them. Maybe they'll learn the really hard way, because for some people there is sadly no way of getting them to learn any other way.

However it isn't right that YouTube is giving these people a free advertising platform. There are some people out there that are actually vulnerable (for whatever reason, this shouldn't matter) and society does need to protect them.

Re:You can't con an honest man....

[masonc]

Often, they are not idiots, they are desperate and don't know where else to turn. Desperate people are ready to believe there is a benefactor willing to help them survive. Walk a mile in their shoes before you condemn them.
Madoff's "clients" where not idiots, they were conned by one of the most sophisticated conmen ever. ANYONE can be conned, no matter how smug and clever you are.

Re:You can't con an honest man....

[ciderVisor]

How ironic that Slashdot should be punting an advert at the top of this very page saying "I'm Rich. You're Not. I Cracked The Code To Making Money. See How I Make $3 Million Per Year Doing Nothing. And How You Can Too."

Re:You can't con an honest man....

[stonewallred]

False. I have never been conned out of money or property and never will be. It has to do with the level of trust you have. I have very, very little. And the only people I really trust all know that ugliness would ensue if they screwed me over.

Re:You can't con an honest man....

[Dogtanian]

Madoff's "clients" where not idiots, they were conned by one of the most sophisticated conmen ever. ANYONE can be conned, no matter how smug and clever you are.

I've read that Madoff's returns were bordering on too good to be true. The implication of the article was that many of the investors should- and quite probably did- realise there was something borderline legally dubious going on, but turned a blind eye to it because the returns were so good and they were therefore happy to assume (I would guess) the plausible explanation that it was something like a clever tax dodge or trick being used to make *them* money.

Re:You can't con an honest man....

[masonc]

False. I have never been conned out of money or property

That you know of.

Re:You can't con an honest man....

[masonc]

People have to trust people. Doctors, lawyers, finalcial advisors, accountants, we all have to trust experts and base our selection on reputation. Some of those experts are crooked some of the time. Unless you are also an expert, how can you always tell?

Your car mechanic installs no parts but charges you $500 for new parts. Short of having another mechanic take the engine apart, how would you know?

Everyone has been taken at some point or other. In most cases, it was not that important. For some, it was their life's savings.

Madoff was one of the elite, a previous NASDAQ chairman and a prominent public figure. People trusted him the way they trust their bank, their brokerage account, their doctor. Even accountants and auditors and others who should have known better trusted him. They are the ones I would now be looking at. They must have known it was too good to be true. The ordinary person had no clue, and you can't expect they would be able to tell something was up.

Re:You can't con an honest man....

[maxume]

Madoff's returns were obviously too good to be true, and multiple parties contacted the SEC about him starting at least a decade ago.

Re:You can't con an honest man....

[Anonymous Coward]

"Desperate people are ready to believe there is a benefactor willing to help them survive"

==> Idiot or Gullible (and in many cases medically so, and thus should be protected). You've got to look after yourself, and you're either honest about it, or you decide to be dishonest, and then you're game for the con. There isn't a "secret millionaire" out there ready to write you a big cheque because you're a decent person.

How many times must people be told that paying upfront for money making schemes / jobs from home schemes is just throwing your money away. I agree that the victims of these cases are usually already poor, but they're also not the brightest sparks in the fireworks factory as well.

Re:You can't con an honest man....

[Zerth]

I saw an ad recently with a guy saying "I make 150/hour off of google ads, find out how!"

And then right next to that one is skyscraper ad of the same guy, except "I make 140/hour off of google ads!"

I was like Damn, this economy sucks, he just got demoted 10/hour in less than 200 pixels, I better get in on this now!

Re:You can't con an honest man....

[Anonymous Coward]

Or that he admits to on Slashdot.

My Jackass of a Former Classmate...

[Anonymous Coward]

showed up as a person I might know on Facebook and his profile mentioned www.InsaneMLMProfits.com. I looked it up and he had this terrible video up, which must haven been taken down and uploaded again. I haven't registered on his site to find out exactly what he's selling - whether it's a catalog scheme, a book or what - but his presentation is humorously pathetic. His opening message is "technology has completely changed the way the network marketing game is played." What a douche.

It was inevitable that youtube would have unscrupulous sellers and schemers on it, and this is only the beginning.

Re:My Jackass of a Former Classmate...

[Anonymous Coward]

That guy is probably you! Nice try though.

Why should it be illegal?

[Opportunist]

With more and more videos being pulled because the various MAFIAA organisations can't get enough, crap like that will soon be the only things left on YouTube. Let's be honest, what's left? Music videos were the first thing to go (or "be unavailable in your country" should they not want to cough up the dough to be available for you). User made videos are now targeted, as well as videos to the likeness of "look how I play $instrument to $song".

Soon all there will be left are videos that, bluntly, nobody wants to watch.

But, to avoid being modded offtopic, let's ask another question: Why should it be illegal to play pyramid schemes? Just because people are stupid enough to fall for them? I have no sympathy for people who are lured in by promises that are quite bluntly too good to be true, where thinking about it for only a minute would give you enough reasons to stay away from it. How can they promise you insane interest rates when your bank can only give you 3% or less? How the heck should they have any influence on your weight (aside from you not being able to even buy bread anymore and thus starving)? And if that's illegal, why is religion still legal while promising essentially the same?

Re:Why should it be illegal?

[QuantumG]

Soon all there will be left are videos that, bluntly, nobody wants to watch.

Videos of someone's cat doing something stupid/cute will always be popular.

Re:Why should it be illegal?

[Opportunist]

After the first 10 cats or so it's getting a wee bit stale to see a cat pee in a toilet...

Re:Why should it be illegal?

[American Terrorist]

Why should it be illegal to play pyramid schemes? Just because people are stupid enough to fall for them? I have no sympathy for people who are lured in by promises that are quite bluntly too good to be true, where thinking about it for only a minute would give you enough reasons to stay away from it.

Libertarian intellectualism at its finest. Why don't we just scrap all the laws and let people fuck each other over every way imaginable? People do stupid things, laws try to prevent and minimize the harm done by those actions.

Re:Why should it be illegal?

[bigmacd24]

Oh fuck, that sounds awesome!

Re:Why should it be illegal?

[ZarathustraDK]

Question: If SchrÃedingers cat pees in a toilet, do you flush or not?

Re:Why should it be illegal?

[American Terrorist]

Kitties are not all Youtube is about though, fortunately. I tried "surfing" youtube once, you are right, it gets boring after a few minutes. I really liked the skateboarding dog though. Most of the Youtube videos I watch are through links or embeds from websites I actually like. Very few people watch Youtube for Youtube's sake.

As for the content sucking, I mostly agree but as I live in China and Youtube has been blocked since last week I'm really missing the ability to follow those links or see the embeds.

Re:Why should it be illegal?

[master811]

Because it is essentially just like any other con or scam (which also happen to be illegal). There is really no big difference between a con artist and someone running a pyramid scheme.
 
Either way they are promising something which simply will never happen.

Re:Why should it be illegal?

[Anonymous Coward]

waiting for the punchline...

Re:Why should it be illegal?

[JBdH]

But, to avoid being modded offtopic, let's ask another question: Why should it be illegal to play pyramid schemes?

Because it's real easy to make one up that cannot be recognized as such, just give people the indication of a reasonable good profit, say 7-10 percent and not something outrageous, add a little environmental awareness or something like that. Come up with the suggestion that you invest in something tangible and volia, you're set. This is what happened with the Teak Plantation investment schemes in Europe. It took the even the financial authorities quite a while to find out that most of these schemes were actual pozzi/pyramid schemes.

Re:Why should it be illegal?

[ciderVisor]

User made videos are now targeted, as well as videos to the likeness of "look how I play $instrument to $song".

I wonder how many royalty payments Hervé Roy received for all the YouTube videos featuring the track "Lovers Theme" ?

Re:Why should it be illegal?

[Anna Merikin]

Here's why:

If it illegal to take someone's money by use of force, so it should *not* be legal to do the same with a pen or a computer.

If the strong of body cannot rob the weak, the strong of mind should be prohibited from doing the same.

Re:Why should it be illegal?

[Scrameustache]

Why should it be illegal to play pyramid schemes? Just because people are stupid enough to fall for them? I have no sympathy for people

Why should it be illegal to mug people? Just because people are scared enough to hand over their wallet to armed assailants? You have no sympathy for people.

Re:Why should it be illegal?

[Anonymous Coward]

I take it you haven't seen 10 Cats 1 Cup, then ?

Re:Why should it be illegal?

[Opportunist]

And that's what's wrong, in my opinion. The law should keep you from being harmed by someone else's actions. But why should it keep you from doing someting stupid and suffer yourself from it?

In other words, I do think the law should protect you from being robbed and mugged, it should give you a title to enforce a contract you and another party willingly entered in, but why should the law protect or even reward someone for acting like a complete moron?

Re:Why should it be illegal?

[transporter_ii]

"Did you really think that we want those laws to be observed? We want them broken. You'd better get it straight that it's not a bunch of boy scouts you're up against . . . We're after power and we mean it. You fellows were pikers, but we know the real trick, and you'd better get wise to it. There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What's there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted [Frederick Mann: Obfuscation of meaning is a key element of the con games bureaucrats and politicians play.] - and you create a nation of law-breakers - and then you cash in on guilt. Now that's the system, Mr. Rearden, and once you understand it, you'll be much easier to deal with." --Ayn Rand

Re:Why should it be illegal?

[Opportunist]

Interesting that so many investment bankers are not in jail, then. Do you think they lost their money in the recent bubble bust, too?

Where's the difference between ponzi schemes and investment bubbles? In both cases it is known to the "inside people" that it will eventually pop, yet one is legal and one isn't. Can you explain why?

Re:Why should it be illegal?

[Opportunist]

I hope you can see the difference between FORCING someone to hand over money and TRICKING someone into handing over money, yes?

In case you don't: In the first case, the alternative is physical pain. In the second case the alternative is ... umm... well, still having the money.

Re:Why should it be illegal?

[Ihlosi]

"Did you really ... It's a quote with several logical flaws that should be blindingly obvious to anyone with half a working brain. Maybe it makes for a nice work of fiction, but it's not how reality works.

Re:Why should it be illegal?

[xigxag]

Why should it be illegal to play pyramid schemes?

Because outside of the damage they inflict upon naive individuals and their families, if left unchecked (as we basically saw with the housing bubble) they have the potential to inflict damage upon the real economy.

Because a large percentage of people are not smart with money but are otherwise extremely capable of being productive contributors to society. As a society it benefits us for people to be justly rewarded for their fruitful labor, which requires mitigating the potential harm of their money-foolish character flaw.

And finally, to the extent that money becomes a hack as opposed to an accurate representation of labor and capital, it is devalued as a concept, which decreases its global worth and utility.

Re:Why should it be illegal?

[Ihlosi]

In case you don't: In the first case, the alternative is physical pain.

Err, no? If you're stronger than the attacker, or better armed, or if the guy is just bluffing, physical pain isn't the alternative. Heck, lots of fun might be the alternative, if you enjoy beating up people or shooting them.

Re:Why should it be illegal?

[Anonymous Coward]

Why should the law protect you against entering contracts with dishonet people that will not respect their words. It's your fault if you're unable to distinguish between trustworthy and untrustworthy business partners.

Re:Why should it be illegal?

[gnasher719]

In other words, I do think the law should protect you from being robbed and mugged, it should give you a title to enforce a contract you and another party willingly entered in, but why should the law protect or even reward someone for acting like a complete moron?

We need laws against robbery and being mugged not to protect strong people, but to protect people who are weaker and/or less well armed and less violent than the muggers. The laws are there to protect people who are physically weaker. I think it is quite sensible to also protect people who are mentally weaker. If the law protects me from a person who uses a gun or a knife or strong fists to convince me to hand other my money, why shouldn't the law protect me from a person who uses his brain and his smooth talking mouth to convince me from handing other my money?

Re:Why should it be illegal?

[American Terrorist]

Why? Lots of reasons. No man is an island, ask not for whom the bell tolls, etc etc. Every action has externalities, libbies like to ignore them all. These complete morons might have kids who will suffer because of their parents' stupidity, or they might be so pissed they go bomb a train station.

Just because someone is a moron doesn't mean I wish them ill. People with Down's Syndrome are notoriously easy to take advantage of, I still hope the law protects them from the assholes of the world.

Re:Why should it be illegal?

[American Terrorist]

lolz Ayn Rand. Wish she had gone Galt. Her writing style is terrible judging from that paragraph, and her content is laughable. As the poster above me noted, fiction != reality. I could base my whole life on Jedi philosophy, but it would work a lot better if I could use The Force.

Re:Why should it be illegal?

[rho]

Your argument does not follow. Laws against robbery and mugging are to protect all people, strong or weak. You don't avoid prosecution of a robber if he robs a strong man.

It may be "sensible", but the problem is that people have a lot of differing ideas of what's "sensible". You've leapt from equal protection to social engineering, which the rule of law is not particularly good at.

Re:Why should it be illegal?

[stonewallred]

Even with almost a quart of vodka in me this morning, i find your comment both intelligent and correct. Wish i had some mod points to give you. As it stands, i salute your clear thinking and view.

Re:Why should it be illegal?

[Ihlosi]

Your argument does not follow. Laws against robbery and mugging are to protect all people, strong or weak. You don't avoid prosecution of a robber if he robs a strong man.

If you try to rob someone significantly stronger than you are, prosecution may not necessary ... or even possible.

Re:Why should it be illegal?

[Zarf]

But, to avoid being modded offtopic, let's ask another question: Why should it be illegal to play pyramid schemes?

Because the unwritten rule of American style capitalism is that there must be value creation somewhere. Laborers create value by exchanging their lives for the creation of services or products. Miners dig value out of the ground. Bankers charge interest. Traders (stocks and otherwise) play the supply and demand game ostensibly creating value via manipulation of time or distance.

why is religion still legal while promising essentially the same?

Because (at least in the US) they are regulated to prevent the show of profit. They are "non-profit" which means they can pay salaries to clergy but they can't turn that into more money than they can justify needing. In other words, people may be "getting rich in heaven" but if anyone is getting rich here it ain't no church ... its a business.

And that's why people tend to be suspicious of televangelism it sure looks like someone is getting rich here on this side of heaven. And if they are getting rich then they may go to jail because they aren't a church anymore but a pyramid scheme. Once profits are shown, non-profit protections are lifted.

The unwritten rule of American brand capitalism is: "Thou shall create value" anything else is a sin.

Re:Why should it be illegal?

[roman_mir]

Why should it be illegal to play pyramid schemes? Just because people are stupid enough to fall for them?

- muhahahahahaha! The only real reason why it is illegal for a private person to do so is because the government (and the banks that the government represents) does not wish any competition in this most lucrative area. The most pervasive pyramid scheme? - currency.

Re:Why should it be illegal?

[Monchanger]

To simply dismiss those who fall to scams as stupid is a gross generalization.

Your argument seems to suggest that scams are easy to detect and avoid, which is of course untrue, as successful scam artists have the required savvy to obfuscate the evidence in a torrent of hope. This is a great assumption if you have more education than a desire to improve your lot in life, which both protects you from the need to believe the scam will help you, while at the same time allowing you to evaluate it critically and recognize its nature. Sadly this is not the case for most people, which is why scams continue to exist and thrive.

I suggest that the second case's alternative is not always a valid option so long people remain vulnerable to what to you is obviously a scam. Force is applied in both cases. Sure, the physical one sucks- a broken arm, a few cracked ribs and a fat lip, the resulting medical bills and few months of pain and loss of employment. The other is psychological- an abuse of the dissatisfaction, jealousy, and even depression that come with limited purchasing power in a very materialistic nation.

Re:Why should it be illegal?

[Opportunist]

People with Down Syndrome are also usually not allowed to drive, vote or basically exercise anything we consider "rights and privileges of an adult" today.

But if you want to suggest we should incapacitate all those that fall for such tricks, more power to you! Hey, what do you know, we might eventually even get a sensible government out of this if being allowed to vote requires more than two brain cells!

Re:Why should it be illegal?

[Opportunist]

Ok, then let's try a different angle: In the first, either decision leaves me with a negative experience. There is no opt out. I can't just walk away from being mugged and decide that I don't want to take part of it. Either I lose money or I lose bodily integrity. The option "ignore and go on" does not exist.

In the latter, there's only an opt-in. I have to go there and actively and willingly participate in the setup. It's fully under the conned person's control whether he allows it to happen. Did anyone go there and tell him to "sign that or else"? No, they played on his greed and gullibility. His choice is to get conned or to just shrug and walk away.

Is the difference now easier to see?

Re:Why should it be illegal?

[rhizome]

But why should it keep you from doing someting stupid and suffer yourself from it?

Because it's not about you being harmed, it's about someone harming you. Ponzi schemes are a confidence game and tricking people is an act of aggression.

Would you carry your logic so far as to say that laws against property crimes are illegitimate? I mean, if you were stupid enough to leave your car outdoors...

Re:Why should it be illegal?

[dcollins]

But, to avoid being modded offtopic, let's ask another question: Why should it be illegal to play pyramid schemes? Just because people are stupid enough to fall for them?

Yes.

I have no sympathy for people who are lured in by promises that are quite bluntly too good to be true, where thinking about it for only a minute would give you enough reasons to stay away from it.

Too fucking bad.

Re:Why should it be illegal?

[asdfghjklqwertyuiop]

The law should keep you from being harmed by someone else's actions. But why should it keep you from doing someting stupid and suffer yourself from it?

It is necessary to protect the stupid from themselves because they're not just going to sit there and quietly starve to death and leave the rest of us alone if they can no longer buy food or shelter. Have you ever noticed how many stupid people there are on this planet? Enough to quickly over throw any ideal libertarian government, I think. That's why a nanny state is necessary. Far too many people in this country depend on one.

Re:Why should it be illegal?

[Anonymous Coward]

Because a large percentage of people are not smart with money but are otherwise extremely capable of being productive contributors to society. As a society it benefits us for people to be justly rewarded for their fruitful labor, which requires mitigating the potential harm of their money-foolish character flaw.

From a week's browsing, this was probably the most insightful comment I have read. Thanks.

Re:Why should it be illegal?

[Anonymous Coward]

Why don't we just scrap all the laws and let people fuck each other over every way imaginable?

I think I've seen some pornos with that plot...

Re:Why should it be illegal?

[Anonymous Coward]

Where's the 'force'? No one's forcing people to buy into these schemes.

Re:"educate yourself! educate yourself!"

[Kuroji]

You'd be surprised how many people fall for one of these schemes, then move on to the next, lose out, and move on to the next to lose out again...

Re:"educate yourself! educate yourself!"

[Skuld-Chan]

Want to see an economy tank all we need is a couple million illiterate people come of working age.

YouTube certainly does have an opinion on videos

[Anonymous Coward]

Bullcrap! YouTube doesn't comment on videos, my ass. They take down "questionable" government propaganda all the flippin' time. They certainly ARE opinionated. They just don't feel like adding another policy on their plate to police. You know, one that's actually a problem.

They've worked on comment spam, now how about video spam?

waves of infection with stupidity

[gilleain]

I wonder how much the spread of 'gifting' (pyramid) schemes is like the spread of an infectious disease.

People must get 'inoculated' against them (by losing their money), but depending on how weak their mental immune system is - how stupid they are - they can catch the disease again.

There could also be various strategies in a population of people who are joining and leaving schemes at various times. This should be a research project; along the lines of research into iterated spatial prisoner's dilemma models.

In order to balance out this comment, I will add a youtube-style comment:

"OMG! THZ GIFTING PROGRAM IS LIEK TOTALLY COOOL! CAN I GET MY LAMBORGINI NOW?!!?"

Re:waves of infection with stupidity

[QuantumG]

Friend of mine seriously considered "investing" in a Ponzi scheme. Even after I explained to him how it works he was still thinking about it. Why? Cause he considers himself smarter than the guy doing the scheme. The conversation went a little like this:

Bob: Have you heard of these short term money market investments?
Me: Heh, these.. what.. investments?
Bob: short term.. money.. you give them money and a few weeks later they give you 100% return.
Me: Oh really.. what are they investing in?
Bob: Doesn't say.. I mean, that makes sense, if you knew what to invest in you wouldn't need them right?
Me: It's a scam.
Bob: Really? Their web site looks legit.
Me: Web developers are pretty cheap ya know.
Bob: Well I've search around for them and I've not found anyone bad mouthing them.
Me: Maybe they change their name every week.. or maybe they're doing the long con.
Bob: I think they're legit man.. umm.. long con? What do you mean?
Me: How much are they asking for?
Bob: Not that much, only a few hundred.
Me: So if you invest a few hundred and in two weeks time they give you double your money back and then ask you to reinvest that and give a few hundred more, you would right?
Bob: Well, yeah, I guess.. maybe a few times.
Me: So if, say, on the third time they said they really needed to you pump in twice as much as you have already given them or they won't be able to give you back your investment.. you would right?
Bob: Well, I guess, I mean, they'd have a good history by then.
Me: After just 3 cycles?
Bob: Yeah..
Me: You're a sucker.
Bob: No.. I'd take the money before then I think.
Me: So if they ask you for your phone number and call you up, will you talk to them?
Bob: Sure.
Me: And you'd give them your bank info.
Bob: Uhh.. umm.. I guess so.
Me: Yeah, you're a sucker.
Bob: I think I'll give em the first hundred and then take their money on the first cycle.
Me: I think they'll see you coming and make sure you never get that first "investment" back.

(Bob isn't his real name, but if you're reading this M... you know who you are).

Re:waves of infection with stupidity

[cayenne8]

I think my biggest question is: "How do I get in at the top of one of these schemes???"

Also, is it that they are able to somehow do these schemes in a way that skirts the laws against them? Is there a 'legal' way to set one of these up?

Hey, if people out there are willing to let go of their hard earned money for less than optimal possible results, who am I not to be willing to collect it?

Re:waves of infection with stupidity

[Ihlosi]

I think my biggest question is: "How do I get in at the top of one of these schemes???"

If you have to ask, you shouldn't be trying it.

The answer is: You have to start it yourself. Of course, this requires a whole lot of sleaziness, excellent people manipulation skills, and a complete lack of any ethics whatsoever.

Re:waves of infection with stupidity

[QuantumG]

Of course, this requires a whole lot of sleaziness, excellent people manipulation skills, and a complete lack of any ethics whatsoever.

And if you have all that and also know how to work a computer, you'd already be CEO of a startup company, surely, and be milking those suckers called "venture capitalists".

How much is tinyurl valued at today?

Re:waves of infection with stupidity

[Tony Hoyle]

Or work for the guy that started it. I wrote the software to monitor one and he offered to graft me on somewhere near the top. As I'd done the maths I realized how sleezy it was (it was fairly obvious that those towards the bottom stood to lose every penny, whilst the guy at the top was looking at £50,000 per month) and in declined. Probably I wouldn't these days.. I'm older, wiser and have less of a conscience.

Re:waves of infection with stupidity

[cayenne8]

"The answer is: You have to start it yourself. Of course, this requires a whole lot of sleaziness, excellent people manipulation skills, and a complete lack of any ethics whatsoever."

Sounds like I have some research to do. Hey, as long as I don't do anything that will land me in jail, I'm game. Stupid people and money are always going to be separated, so, why not enrich myself a little, eh?

Re:waves of infection with stupidity

[stonewallred]

Lol, penrose baby. Had an old boss man try one of the gifting scheme on me. He pulled out this diagram, which was an upside down pyramid and started talking. I told him no way it was a pyramid scheme, and he actually said "No." and turned the diagram upside down, making it into a pyramid, and said "This is a pyramid, what I am offering is not see?" and flipped the paper back around. Few years later he bought a used CAT diesel generator, that was about the size of a small car, and close to 10K in food and supplies for Y2K. Funny thing was he lived in a neighborhood with all the houses close together, he had a generator and all these supplies, but no firearms. Fucking idiot he is.

Re:waves of infection with stupidity

[stonewallred]

What about the dude that ran an ad in one of the NY papers back in the 70's that said "Last chance, send $1.00 now" and got like 14K. Now that was clearly a way to separate the fools and their money, without doing anything illegal.

Re:waves of infection with stupidity

[Spatial]

Even after I explained to him how it works he was still thinking about it. Why? Cause he considers himself smarter than the guy doing the scheme.

Absolutely right. That's a key element in many scams; they're set up so that the 'mark' feels that they're the one doing the conning.

For example, if you've seen any 491 scam emails you'll notice that they're all spelled badly and try to come across as being reliant upon the recipient. It's an effort to come across as being helpless and desperate, an easy target as well as easy money. How many of the people who fell for those scams really intended to give the majority of the money back to their Nigerian princes?

Re:waves of infection with stupidity

[elysiana]

It worked for Jeff Peters.

Re:waves of infection with stupidity

[schmiddy]

Also, is it that they are able to somehow do these schemes in a way that skirts the laws against them? Is there a 'legal' way to set one of these up?

You might be surprised, but there are many long-running Ponzi schemes skirting the law and brazenly operating in the open. Some of them are exceptionally clever. Example: Vector Marketing (do some googling of the company if you don't believe me) The basic idea of Vector is they're flushing out as much money as they can from the friends and families of their "workers" who are paid very little to sell overpriced crap to the same friends and family. If you're "successful", you get to start your own affiliate, and recruit more people to join the scheme... and so it goes. Vector was taking in several hundreds of million dollars per year last I checked. They call themselves "Multi-Level Marketing", and there are dozens of copycats.

Take a look at the charges levied against Madoff. Mail fraud, wire fraud, false statements, perjury... basically he was charged with lying to investors, in various forms. If you're upfront about what you're doing, and have plausible deniability (i.e. "We're really selling these great, expensive knives, not milking suckers!") you can get away with a lot.

P.S. I in no way condone the actions of any of these fraudsters, and neither should you. They are scum, sucking hard-earned dollars out of people too dumb to know better. I just wanted to illustrate how they operate. Avoid these crooks and other similar MLM scams.

Re:waves of infection with stupidity

[Anonymous Coward]

I had a friend who was doing something similar. Quixstar/Amway. TOTAL ponzi scheme with a hint of real credibility. Took me about 2-3 hours to figure out the 'business' would never even break even much less make money. It was a rather convoluted mess of promo points etc. I tried many times to show him this he would hear nothing of it. Little did I realize I was doing it at the wrong times. I was doing it while his wife was around.

A few years later he was out of it and I asked him why he quit. "Oh I knew it was con the whole time. But it had a nice side effect of getting me out of the house for HOURS at a time and I didnt have to listen to whatever stupid shit my ex wife was saying. I was 'working'."

She wasnt too bright so he sold her 'the dream' then used it as an excuse to go to the bar. He called it the best 2 grand he ever spent.

Re:waves of infection with stupidity

[Anonymous Coward]

Gambling is popular. Joining a Ponzi is not worse than buying a scratch ticket. Actually better since the money is not going to fund invasions, surveillance, etc.

Re:waves of infection with stupidity

[Anonymous Coward]

I'm older, wiser and have less of a conscience.

Why isn't there a "-1 Cynical Asshole" mod?

Re:waves of infection with stupidity

[Zerth]

Classic one:

Send an email offering clever moneymaking ideas for free, just send a stamped envelope(no need to self address it, you'll copy it off the outside envelope for them!) to your mailbox.

Take all the envelopes you get, use them for yourself(a bit of white-out on the pesky pre-addressed ones). These days, that a stamp and an envelope is worth even more.

Don't use postal mail much? Sell them as "conveniently pre-stamped envelopes" at the flea market for just the cost of a stamp. Why just for the cost of the stamp, asks a flea? You make it up in volume!

Note, mail fraud is insanely easy to prosecute as the USPS is the one delivering the evidence.

Re:waves of infection with stupidity

[eugene ts wong]

Thanks for pointing out how the mark is supposed to feel. I've always wondered why the scams don't seem to be well written. I figured that it would attract more suckers, if it were well written, but I guess it depends on the sucker. I might feel smarter if the scam were well written, while others might feel smarter if the scam were poorly written.

It's frightening how a small thing like spelling can make such a difference.

Re:waves of infection with stupidity

[The Archon V2.0]

As I'd done the maths I realized how sleezy it was (it was fairly obvious that those towards the bottom stood to lose every penny, whilst the guy at the top was looking at £50,000 per month) and in declined. Probably I wouldn't these days.. I'm older, wiser and have less of a conscience.

When 'wisdom' get modified to include "Willing to risk jail time for scamming people"?

Re:"educate yourself! educate yourself!"

[ZarathustraDK]

Solid critical thinking skills start with a decent education. Decent education starts by making it free, neutral and accessible.

So true.
Speaking as a philosopher of education I can say that there's no end to the practical application of logic and reasoning that you're taught in the course of the study.

It should be an obligatory course in elementary school, but for some reason it's much more important to have bible-stories read to you.

Makes sense right? I guess someone thinks it's a shortcut to good behavior being told what's right and wrong in broad general terms open to interpretation, instead of equipping people with the basic tools to figure those things out for themselves on a case by case basis in an exact, non-interpretable manner.

Re:"educate yourself! educate yourself!"

[jimicus]

If it was that quick, we wouldn't hear of the people who've invested their life savings and borrowed money to invest in a GUARANTEED 100% RISK FREE OPPORTUNITY IN NIGERIA!!111oneoneone.

Legal

[barncha]

"It's just money changing hands"

Isn't that how banks work? Or used to until a few months ago...

Re:Legal

[Zarf]

Banks charge interest.

Re:"educate yourself! educate yourself!"

[Anonymous Coward]

Bernie Madoff ran one remember?

Re:"educate yourself! educate yourself!"

[TheVelvetFlamebait]

Sounds like a cheap education to me.

No, it sounds like the most expensive, yet useless education ever devised. You lose a lot of money, and you learn one way NOT to lose your money, when it's far too late.

Re:"educate yourself! educate yourself!"

[Anonymous Coward]

Want to see an economy tank all we need is a couple million illiterate people come of working ^H^H^H^H^H^H^H voting age. ..then blindly vote for empty promises of "hope & change" only to be given the same tired old socialism that has failed throughout history. How many trillions have just been poured down the drain to bail out the billionaire bankers? How many billions given away to automakers to "prevent" bankruptcy only to find it's now considered inevitable? Why is Illinois getting 1/9 of the bailout funds for highway construction? etc. etc. etc.

The graft, fraud and deceit that will lead to the implosion of America is an expensive lesson, indeed.

There are always idiots, ...

[Hurricane78]

...and there always will be. So why not at least use them for the good of the rest (especially ourselves)? ^^

Yes, the problems are the stupid people. But they will not ever go away. So we better start accepting to live with the consequences.

The once richest man in the world (Bill Gates) did exactly that.
In fact, most companies work that way.
Most governments definitely work that way.

So why not do it ourselves, in a morally more acceptable way, than someone more evil else doing it anyway?
I see it as a form or natural selection. Not needed when resources are plenty. But the only thing that counts, when resources are scarce.

Re:There are always idiots, ...

[benjamindees]

How is it that governments exploit stupid people, exactly?

Re:There are always idiots, ...

[stonewallred]

lotteries come to mind

Re:There are always idiots, ...

[benjamindees]

Do you think any stupid people spend more on lotteries than they receive in welfare / social security?

Re:There are always idiots, ...

[Anonymous Coward]

Do you think any stupid people spend more on lotteries than they receive in welfare / social security?

Of course, what do you think credit cards are for?

You can watch your gift...

[Kindaian]

in a frame behind the prison bars... ;)

Re:"educate yourself! educate yourself!"

[QuantumG]

You lose a lot of money, and you learn one way NOT to lose your money, when it's far too late.

Sounds like someone went to Brown.

It's *money* which is the Ponzi scheme

[Colin Smith]

ok. Follow me here. This is real simple, but 300 million Americans keep missing it.

I need some money in order to facilitate a transaction... How do I create that money?

I go to a bank (the FED) and borrow $100 from them. The FED creates new money (credit) and loans it to me at 5%. (Did you see the pea in the shell game? It was right there. Cos millions keep missing it)

Right, so there is only $100 of credit in existence but now I owe them $105.

1 year later I'm a bit stuck because I've paid off most of the loan to the FED but that last $5 is a real bitch because it just doesn't exist. So what do I do?

I need some money, so I go to a bank (the FED) and borrow some more money from them. The FED creates that new money and loans it to me. Great! I can pay that $5 which didn't exist. But wait, I now need to pay off interest on the new load. lather, rinse, repeat.

That's money. The debt has to keep growing, or the system collapses. Growth. Growth. Must have growth. A Ponzi scheme of epic proportions. Hey, maybe you can talk some bums on the streets to take out some loans for a couple of McMansions. Then everything will be all right.

That's money. The government created it that way, and can change it as required. Don't you think they share some of the blame?

Re:It's *money* which is the Ponzi scheme

[lyml]

Yes, because economy is a zero sum-game.

Re:It's *money* which is the Ponzi scheme

[Anonymous Coward]

The government can also infuse money by printing it and buying new infrastructure (or weapons of mass destruction). This is not a loan and no interest has to be paid back.

So not all money has to come from loans.

The money is generally "out there" - but you have to earn it. The concept is generally called working - you might not be familiar with it.

Re:It's *money* which is the Ponzi scheme

[Cathbard]

Hey, you've forgot about fractional reserve banking. Somebody deposits this $100 in cash created by the Fed into their bank and then that bank can loan out $1000 in notary currency and charge 5% (or w/e) for that too. The Fed only creates the initial $100. Oh what a tangled web we weave ........

Re:It's *money* which is the Ponzi scheme

[Colin Smith]

Um... Didn't you notice the last 2 years?

The only time it's not a zero sum game is when it's growing... The instant you hit a limit, like lending to people who can't afford the houses they are buying, it collapses and you lose.

Re:It's *money* which is the Ponzi scheme

[Tony Hoyle]

No thats tort money, which isn't used anywhere.

Fractional reserve allows them to lend out a fraction of their reserve - hence the name. You can't create money (well, the central bank can, but it's tightly controlled because of the inflationary effect).

For a deposit of $100 they can lend out $80, that gets deposited and lent out as $64, then $51, $40, etc.

There appears to be more money in the system but there actually isn't at all. Only the initial $100 exists - it's just been lent to multiple people.

In the real world it's more complex - banks sell their debt to other banks to increase their reserves, so they can lend out more (because they make interest on lending - it's their main source of income).

Where this system falls down is where someone in that chain suddenly decides they can't pay it back. This is how we got into the mess we're in right now, where enough people failed to pay the debt back all the banks suddenly remembered that none of this money they claimed to have actually existed at all.. it was all tied up in debt.

Re:It's *money* which is the Ponzi scheme

[Tony Hoyle]

The $5 comes from work - you know, the means of selling goods and services to generate income.

You're talking about a world where nobody produces anything, so the only income they have is from banks. That's not a realistic model.

Oh and nobody creates money, except in exceptional circumstances (the central bank can, but an ordinary bank can't.. that's self evident, otherwise they'd all have infinite money). Credit to you is a net debit to the bank (and a source of income, due to the interest payments). This is why banks aren't keen to lend right now - their reserves are low as they've taken a hit from all the bad debt.. because they can only lend based on their reserves they're cherry picking the lending to the safest debtors.

Re:It's *money* which is the Ponzi scheme

[complete loony]

Nope, that's not quite how it works either since you missed the part where the bank borrowed some amount (say $10) to cover your loan from the FED or overseas, and you deposited (or spent and the seller deposited) that $100 into another bank account. I suggest you read The Roving Cavaliers of Credit recently written by Steve Keen, which explains how a pure credit economy can function and how it can fail.

Re:It's *money* which is the Ponzi scheme

[Kjella]

1 year later I'm a bit stuck because I've paid off most of the loan to the FED but that last $5 is a real bitch because it just doesn't exist. So what do I do?

If it's (hyper)inflation you spend it as soon as possible before it loses value until it collapses like the reichmark in 1920s germany or just recently the zimbabwean dollar. If it's stagflation you hoard it as money is increasing in value. What you're missing here is that somewhere, real value is produced. Imagine that there's 100$ total and there's 10 foobars, the only goods to trade so each is worth $10. Now there's a foobar maker, which produces another foobar - there's now 100$ and 11 foobars and the new market price is 9$. Who's earned value? The people sitting on a 10$ bill. Now imagine how well it works if everyone wants to sit on their 10$ bill.

So what's the solution? To print money, they print one more 10$ bill and suddenly there's 110$ total and 11 foobars and the money market works. Of course they can fall to the temptation and print more money than actual growth, say 110$ and 10 foobars, meaning you can sell a foobar for 11$. The government basicly took part of the value out of everyone's 10$ bills. But people have a very simple way of fighting this - don't sit on money, sit on goods as printing money only increases prices. In those situations money is just an intermediary as you swap one good for another, you buy gold or a saner currency.

Of course the government like everyone else like skimming something of the top, but for the most part they work hard to keep the financial system going. Once you stop believing in the currency you also stop believing in deposits and credits because they make you "stuck" in that currency and so the whole economy withers. Like with the human body, you have vital organs but if you have no circulation system then none of those will survive either.

Re:It's *money* which is the Ponzi scheme

[Antique Geekmeister]

Except that your model assumes it's the government's fault that paying off that last $5 is such a beggar to do. While money is a nominally limited resource, it's not _that_ limited. To pay off that last $5, you may have to skip going to Starbucks, or that trip to see your mother, or buy a used small car instead of an SUV, or avoid taking out your next loan for a house expecting to sell it for more value than you paid.

That's money, and that's _life_. Blame the government's money mismanagement for what they did do wrong.

Re:It's *money* which is the Ponzi scheme

[Ihlosi]

If it's stagflation you hoard it as money is increasing in value.

Deflation is the term you're looking for. Stagflation just describes periods of economic stagnation coupled with inflation, and inflation is always a motivator to spend money instead of hoarding it.

Re:It's *money* which is the Ponzi scheme

[stonewallred]

"You can't create money (well, the central bank can, but it's tightly controlled because of the inflationary effect)." Really feds been running the printing presses 24/7 since the market started crashing back in October. {You can't create money (well, the central bank can, but it should be tightly controlled because of the inflationary effect). fixed that for ya}

Re:It's *money* which is the Ponzi scheme

[Samschnooks]

You forgot to add that the money that the banks has is from depositors. Yes, some of those deposits are money from loans. But many of those deposits are from folks who actually saved their money.

No wonder folks hate the Fed - they have no idea what it does.

Re:It's *money* which is the Ponzi scheme

[American Terrorist]

No, the $5 comes from other people with "money". Banks can and do create money, which is why they claimed to have nearly infinite money just before the crash. If a bank is allowed to claim a AAA mortgage backed security is part of their reserve, then lends out 4 times the value of said security, they have in fact created money out of nothing.

Re:It's *money* which is the Ponzi scheme

[n1ckml007]

new load. lather, rinse, repeat. That's money

The economy is just *dirty*

Re:It's *money* which is the Ponzi scheme

[Muckluck]

Actually, I believe you are referring to the "Money Multiplier". This is a function of FED policy which the US banking system is partially based upon. When I put $100 into the bank as savings, the bank has to honor one of the tools of the FED called the "Reserve Requirement Ratio". The RRR is a requirement that the bank keep in reserves a percentage of my deposit in available cash and allows them to loan out the rest. So if, for instance, the RRR is 10%, the bank will keep $10 in cash reserves and loan out $90. This keeps happening (up to a point) "creating money" that did not exist before. BTW - the pea in the shell game is here. The "Money Multiplier" ends up being the inverse of the RRR, or in our example, 10. That means that for the initial $100 deposit that I make, $1000 can be loaned out as the money travels on the balance sheets from bank to bank. Two things are required for this FED tool to work. One - you MUST have a nation which SAVES money. The United States is banking on the savings of the Baby Boomers. We need some new thrifty savers. And two, we ASSUME that the banks will loan out any excess reserves. If they are scared to make loans, new money is not "created". So, do the world a favor - get out of credit card debt, save for a while, then borrow some money to spend...

Re:It's *money* which is the Ponzi scheme

[johannesg]

Yes, because economy is a zero sum-game.

I sense your sarcasm, but economy _is_ a zero-sum game. It is so big that you cannot see all the parts, but if you add them all up they do add up to zero.

The reason is easy to see: your hard work may add _value_, but value by itself is not _money_. Money can only be created by the fed (and similar institutions in other countries), so if they charge interest for creating money than inevitably, the sum of all the money they loaned out will be less than the sum owed back to them.

It _is_ a giant ponzi scheme, and after running for about 400 years it _is_ about to fail completely. Sit back and enjoy the show, it will be spectacular...

Re:It's *money* which is the Ponzi scheme

[houghi]

And even if those banks could make money, it would make no difference.

Say there is only 1.000.000 Money Units (MU) and a bread costs 1MU. The banks print another 1million MU, so now there are 2.000.000 MU. What will happen is that the worth of the brad is still the same as previously, compared to the total amount of money.

So that bread costs now 2MU. People complain, yet even though you need to pay more MU, the expense in itself is the same. If the price goes from 1MY to 1.50MU, the price actually went down.

Inflation is what it is called.

And now please everybody explain me why I am wrong.

Re:It's *money* which is the Ponzi scheme

[Red Flayer]

I sense your sarcasm, but economy _is_ a zero-sum game. It is so big that you cannot see all the parts, but if you add them all up they do add up to zero.

False. Even the Austrian school knows that economics is not a zero-sum game.

Re:It's *money* which is the Ponzi scheme

[Jason Levine]

As another poster said, the $5 comes from work. How it really works is this:

1. 10 people deposit $100 each into a bank. The bank now has $1,000 in their vault. In return for the deposits, the bank promises each person some interest (say 1.5%) on their money.
2. Small Business Owner comes in and needs a loan. The bank lends him $1,000 at 5% interest.
3. Small Business Owner uses that money on his business to increase sales. He winds up making (after other expenses) $1,500.
4. Small Business Owner pays back the $1,050 ($1,000 + 5%) to the bank leaving him with $450 profit.
5. The bank uses the $50 profit from the loan to pay the interest on the 10 accounts: $1.50 each.
6. The bank makes a profit of $35.

Repeat this on a much larger scale (more/larger deposits, more/larger loans, etc) and the bank makes very nice profits.

And if you try to point out that money "magically" gets created in step 3, it doesn't. People get paid for their work. They then use that money to buy goods and services. Those payments are used to pay other people for their work. Money isn't created (except by the central bank), it is circulated from person to person.

Re:It's *money* which is the Ponzi scheme

[Colin Smith]

What you're missing here is that somewhere, real value is produced.

No, I'm not missing that. What I'm pointing out is the nature of the money itself. That is; It's a pyramid scheme, it MUST grow or collapse. (Stagflation is no growth, but with inflation, in fact it's actually just inflation of a different part of the economy).

I could also print money, or use gold. I could print a billion dollars and there would be no pyramid scheme if it was illegal to borrow money into existence at interest.

The people sitting on a 10$ bill. Now imagine how well it works if everyone wants to sit on their 10$ bill.

Read a bit on Silvio Gesell.

Of course the government like everyone else like skimming something of the top, but for the most part they work hard to keep the financial system going.

Why on earth should the government need to work hard to keep the financial system going? Money is just a means of exchange.
 

Re:It's *money* which is the Ponzi scheme

[delt0r]

I like the quote, "Humans don't understand exponential curves". Don't know who said it.

Now consider how many retirement schemes claim that 10% is no problem at all for 50+ years, generation after generation.

IMO Fractional banking is broken. And we haven't found the bottom yet.

Re:It's *money* which is the Ponzi scheme

[maxume]

Colin Smith is crying that you can't grow new potatoes (and gets part of it wrong, the primary mechanism of money creation is when the federal reserve borrows money, usually from the treasury), but the fractional in fractional reserve banking really does refer to the amount of money held in reserve, not the amount of money lent out.

This means that banks are essentially always insolvent in real number terms, but it usually doesn't matter.

Re:It's *money* which is the Ponzi scheme

[secondhand_Buddah]

For a deposit of $100 they can lend out $80, that gets deposited and lent out as $64, then $51, $40, etc.

No- I'm afraid you've got this totally wrong. Bankers can lend out multiples of what they have in reserve. At the peak of it, CitiBank's factor was 47 - meant that they could lend out 47 times of the value they had in reserve. This is why banks encourage saving.

Re:It's *money* which is the Ponzi scheme

[tucuxi]

I sense your sarcasm, but economy _is_ a zero-sum game. It is so big that you cannot see all the parts, but if you add them all up they do add up to zero.

No, not at all. Economy, understood as "interchange of goods and services" is certainly not zero-sum. There can be many levels of dynamic equilibrium, and it is both possible to have almost everybody be poor (have a look at the history books - they were human back then too) and to have almost everybody live in abundance -- with identical inputs in terms of people involved and natural resources tapped.

Certain things multiply the efficiency of an economy, and benefit all involved. Technology, for instance, allows a lot of physical labor to be avoided. A working justice and health system allow economic actors greater confidence in the safety of their investments and their persons, and results in more economic actions (instead of hoarding assets for an uncertain future).

Economy is not (only) about money. There was economy before money. Money is only a very useful mechanism to exchange goods and services efficiently, and a handy measuring rod -- even it its length changes constantly.

Re:It's *money* which is the Ponzi scheme

[delt0r]

The real ratios are below 1%. ie the bank only keeps cents out of every 100 deposited. The system must fall down eventually, because the amount of money in the economy must increase exponentially and is not bounded by anything physical. Yet money has no meaning outside what you can physically buy with it which cannot increase exponentially indefinably.

Getting a full retirement fund to term out of the current system before a *bust* is quite a trick.

Re:It's *money* which is the Ponzi scheme

[Anonymous Coward]

http://www.asktheharvardmba.com/2008/05/03/is-global-economics-a-zero-sum-game/
http://everydayecon.wordpress.com/2006/10/11/economics-is-not-a-zero-sum-game/

Re:It's *money* which is the Ponzi scheme

[jabithew]

Not quite true. People create money when they create value. Otherwise, hear hear!

Re:It's *money* which is the Ponzi scheme

[ggeezz]

If it's (hyper)inflation you spend it as soon as possible before it loses value until it collapses like the reichmark in 1920s germany or just recently the zimbabwean dollar. If it's stagflation you hoard it as money is increasing in value. What you're missing here is that somewhere, real value is produced. Imagine that there's 100$ total and there's 10 foobars, the only goods to trade so each is worth $10. Now there's a foobar maker, which produces another foobar - there's now 100$ and 11 foobars and the new market price is 9$. Who's earned value? The people sitting on a 10$ bill. Now imagine how well it works if everyone wants to sit on their 10$ bill.

So what's the solution? To print money, they print one more 10$ bill and suddenly there's 110$ total and 11 foobars and the money market works. Of course they can fall to the temptation and print more money than actual growth, say 110$ and 10 foobars, meaning you can sell a foobar for 11$.

If we keep making more foobars with the same amount of resources, then the price should come down over time. Eventually you should be able to take the $10 you earned and get two foobars instead of one. But by printing more money the government is taking all of the productivity gains for themselves.

And do we really need them to keep the financial system going? That is, do we need to keep the price of foobars at $10 to keep people from sitting on money? Absolutely not! If somebody out there is selling foobar-makers it always makes more sense to buy the foobar-maker than to sit on your money.

And what about people consuming foobars? They will always prefer to consume now rather than later. Would you rather have an ipod/house/car now or 10 years from now? You can keep the money supply constant, let prices fall, and the difference between the price of a car now, and the price 10 years from now is offset by the fact that you don't have to go without a car for 10 years.

And that's the policy that makes sense anyway. We shouldn't be forcing people to buy cars now OR to wait 10 years to buy a car. They should make those decisions like they make every other monetary decision, based on what provides them the most value.

Re:It's *money* which is the Ponzi scheme

[terjeber]

Oh and nobody creates money, except in exceptional circumstances (the central bank can, but an ordinary bank can't.. that's self evident

You should always examine closely what is self-evident, it rarely is. Yes, an "ordinary" bank can create money. Not a limitless amount, but close enough. When you walk into a bank to borrow money that money does not come from deposits the bank has anywhere, the bank actually gets to conjure the money up from nowhere and then deposit that money into your account. True.

The bank needs to deposit an amount with the Feds to be able to do this, but the amount the bank has to deposit is (now a very small) fraction of the amount of money they are allowed to conjure up from nowhere.

Re:It's *money* which is the Ponzi scheme

[daem0n1x]

Congratulations, you're the master of Simpleton Economy!

Money is nothing but another commodity. Economy is about money as much as Astronomy is about telescopes. What is important is value.

First, let's look at the inflation. When the FED takes money out of its ass, there is more money in circulation, so it's worth less. It means that, if you had €100 and you could buy 100Kg of potatoes, now you need €105 to buy the same potatoes. No value was created.

Another thing to look at is the increase of the product. You used your €100 to buy 100Kg of potatoes that you planted. The yield is 1000Kg that you sell by €1000. Voilà! You have just created €900 from thin air! You can pay your loan and still pocket a big sum of money.

The following is IMHO: Producing actual stuff is the only valid way to increase wealth. The whole financial merry-go-round where money grows out of nothing is just a bunch of bullshit and relates pretty well to a Ponzi scheme. When the real economy can't hold the speculation anymore (like people massively failing to pay their houses) the whole castle of lies comes crumbling down.

Re:It's *money* which is the Ponzi scheme

[Anonymous Coward]

This is why banks encourage saving.

If banks wanted to encourage saving they would offer better then 1% in savings and 4% for a 10 year CD.

Re:It's *money* which is the Ponzi scheme

[parnasus]

Oh and nobody creates money, except in exceptional circumstances (the central bank can, but an ordinary bank can't..

Actually, they can and do. Haven't you ever wondered why the Fed borrows money when it has the capability of just creating more by fiat?
http://video.google.com/videoplay?docid=-2550156453790090544&ei=KaDkSYTpG4uk-wG92IiZCQ&q=money+as+debt&emb=1
The name of the video is Money as Debt. I'll warn you, the video is a bit long (~45 minutes) but worth the information it contains. There are smaller, segmented video if you'd prefer to break it into smaller chunks.

Re:It's *money* which is the Ponzi scheme

[MoralHazard]

"Tort money"? You mean FIAT money, right?. As in, the money has value because the government decrees it so (paper notes), not because the money has any independent value (e.g., gold coins, sacks of grain, etc.).

Re:It's *money* which is the Ponzi scheme

[vertinox]

You're talking about a world where nobody produces anything, so the only income they have is from banks. That's not a realistic model.

Economic activity happens when money changes hands for goods and services. Not when something is produced.

If the later were true, the Soviet Union would have been fine just meeting production and farming quotas.

Yes, economic activity does lead to production and technological innovation and vice versa, but production without economic activity simply involves people producing for the sake of producing whether other people want it or not.

And I think that is specifically what the USSR did.

Re:It's *money* which is the Ponzi scheme

[Colin Smith]

Were you replying to another post? The bank mentioned was the FED, for simplicity, and I avoided the money multiplier, also for simplicity. The US government borrows all money into existence from the FED, and all money in existence has an associated debt. Those paper US dollars in your pocket are Federal Reserve Notes and even they have a debt attached. It doesn't matter that the money was deposited at another bank or loaned on through the fractional reserve system because there is always a larger debt than money, and the debt always requires "growth" to service the interest on the debt. If "growth" falters, it collapses.

It's an epic Ponzi scheme.

 

Re:It's *money* which is the Ponzi scheme

[vertinox]

Why on earth should the government need to work hard to keep the financial system going? Money is just a means of exchange.

Because historically, when left to its own devices and because of human nature, the financial system always results in a boom/bust cycle which causes economic problems for everyone involved.

Those persons who are affected negativity by the bust situation tend to either vote vote for change and if that doesn't work encourage radical forms of government who are willing to scrap the original process all together.

The whole point of the Fed was because of the bank panics in the 1900's in order to work against the natural boom bust cycles so people are eased into it or generally prevent the boom bust from happening.

Of course the Fed did nothing to stop the great depression, but perhaps they did at least east us into and out of the current crisis.

Re:It's *money* which is the Ponzi scheme

[Wildclaw]

Economic activity happens when money changes hands for goods and services. Not when something is produced.

And that reasoning is what brought the great USofA to its knees in 2008. Wall Street are full of people with that mindset and it has cratered the whole economy as it all became about shuffling around goods and services while nothing real ever was produced. Lots of "economic activity" but no wealth.

The true answer is that wealth and economic prosperity is created from producing things that are wanted, and then efficenctly allow the buyers to buy those items. Middlemen (traders) are needed for that to work, but they should never be the focus of the economy as they have been for a good while.

Re:It's *money* which is the Ponzi scheme

[networkBoy]

you are, in fact not wrong as far as you went.
Specifically look at a "fixed value" Money Unit (gold, silver, etc.)
The price of many goods not heavily dependent on technological improvement (a loaf of bread in your example), costs relatively the same fraction of an ounce of gold as it did in years past. Sadly I do not have a link handy to the reference, and the ref I had was before the economy with apeshit recently, but from the 70's through the early 2000's it was relatively static, a loaf of bread changed in price, but in fact tracked fairly statically with gold.
-nB

Re:It's *money* which is the Ponzi scheme

[flitty]

If a bank is allowed to claim a AAA mortgage backed security is part of their reserve, then lends out 4 times the value of said security, they have in fact created money out of nothing.

Wrong. In simpler terms, when a bank creates a house loan, it is NOT creating money. It's risk management and creating a value for risk/investment and future value of the money invested.

Re:It's *money* which is the Ponzi scheme

[Abcd1234]

There appears to be more money in the system but there actually isn't at all. Only the initial $100 exists - it's just been lent to multiple people.

Uh, no this *specifically* creates money. As in, the money supply increases. I mean, what do you think happens to that money that was "lent to multiple people"? Each one of those people spends it. It goes to builders, who use it to pay employees, etc, etc. ie, that money enters circulation. It exists.

Something tells me you're actually getting money and currency confused. And if that's the case, you should perhaps reconsider speaking so authoritatively on this topic.

Where this system falls down is where someone in that chain suddenly decides they can't pay it back.

Correct. At that point, that money which was in the system essentially evaporates. It disappears. Voila, economic contraction. Which, of course, explains why the fed is so spectacularly paranoid about deflation, and why they're doing everything they can to print new cash in order to keep inflation positive.

Re:It's *money* which is the Ponzi scheme

[nahdude812]

A healthy economy is always creating new value for itself, however it measures value. To maintain a stable currency, new currency needs to be introduced to represent the new economic value, or else deflation occurs, which can be even more damaging to currency than inflation.

Re:It's *money* which is the Ponzi scheme

[benjamindees]

You understand it's the same thing? They keep $20 in reserve and lend out 4x that.

The problem is that the depositor still thinks he has $100, while most of it has actually gone out the door. As pointed out, this becomes worse when most of the loans are between banks.

Re:It's *money* which is the Ponzi scheme

[operagost]

Suppose two people live on an island. One fishes, and one picks fruit. They barter some of their products to each other. Is that zero-sum? If so, does the fisherman or the gatherer "win"?

Re:It's *money* which is the Ponzi scheme

[benjamindees]

I'm trying to come up with a way to debunk this. And this is the best I've come up with. I'm not completely happy with it but here goes.

Bankruptcy destroys debt. So, if your initial loan creates enough of a profit to you, you get that money from someone else, pay off the interest, and you stay in business. That other person goes bankrupt. The debt is written off by the FED (note I don't actually know if this is the case).

I like your example. But it is overly simplistic. At any given time, there are enough players declaring bankruptcy to destroy a significant amount of debt. When trade stops producing economic growth, a few major banks go bankrupt and the FED writes off that last 5% of the economy or whatever. We all live happily ever after without the need for constant growth because there is plenty of money circulating in the economy at that point.

I kind of like this interpretation because it drives home the stupidity of not letting banks fail. But I'm open to criticism.

Re:It's *money* which is the Ponzi scheme

[secondhand_Buddah]

No its not - for a deposit of $100, general banks can lend out 8-10X what they have in reserve. If you deposit $100 - they have $100 in reserve and can lend out $800-$1000. Citibank could lend out $4700 (47X )for every $you deposit. What the parent poster was saying, is how people generally believe the banking system works. It used to, until fractional reserve banking came into play.
Fractional reserve banking also destroyed money. We no longer have money - we use a fiat currency, which is entirely based on debt. If every loan was repaid, there would not be one single cent of currency in circulation.
This is because, when you borrow currency from a bank, it gets created. A fiat currency is simply a debtors note. Banks can create as much debt/currency as their factor will allow.
What actually happened was that banks are allowed to keep securitised assets as part of their reserves. a lot of securities are based on tranches of Mortgages. so when the over inflated property bubble burst, suddenly banks were left holding securities that were almost worthless.
This meant that their declared reserves were too small, compared to the debt issued, so they could no longer create any loans/debt. the government bailout is intended to bolster their reserves so that they are in a position to be able to lend again.

Re:It's *money* which is the Ponzi scheme

[Ihlosi]

No its not - for a deposit of $100, general banks can lend out 8-10X what they have in reserve.

Citation needed.

If you deposit $100 - they have $100 in reserve and can lend out $800-$1000.

No. If someone deposits $100 and the bank lends out $100 or more, it doesn't have a fractional reserve, it has no (zero/zip/nada) reserve. If the bank lends out more than $100, it'll be in debt, too.

Citibank could lend out $4700 (47X )for every $you deposit.

Citation needed.

What the parent poster was saying, is how people generally believe the banking system works. It used to, until fractional reserve banking came into play.

Lending more than the bank has in deposits is not fractional reserve banking. It's zero (or even negative) reserve banking, if anything.

Re:It's *money* which is the Ponzi scheme

[benjamindees]

Citation needed.

Stop doing this.

Re:It's *money* which is the Ponzi scheme

[benjamindees]

As pointed out, this becomes worse when most of the loans are between banks.

http://en.wikipedia.org/wiki/Fractional-reserve_banking#Money_creation

A single bank cannot loan out more cash than it has. It keeps a fraction in reserve. Aside from what I already pointed out, that the depositor still believes he has his original deposit, a bank does not create new currency out of thin air.

Banks as a whole, however, can end up loaning out more than the original deposit, through loans made between them. Please read the wikipedia section above and the associated table. It is quite informative.

Re:It's *money* which is the Ponzi scheme

[Ihlosi]

Stop doing this.

Why?

I'm only doing it if the claim made is truly far-fetched and I couldn't find any good evidence myself. Presented with such, I'll accept the claim, otherwise I'll consider it void.

Re:It's *money* which is the Ponzi scheme

[Anonymous Coward]

Because he could easily provide several citations that wouldn't change anything, and I don't want to see any stupid debates about authority of sources.

Regurgitating crap from around the web is pointless. That's what wikipedia is for.

Re:It's *money* which is the Ponzi scheme

[Abcd1234]

a bank does not create new currency out of thin air.

No. It creates *money* out of thin air. Shit, it's in the *very first fucking sentence in that section*:

Modern central banking allows multiple banks to practice fractional reserve banking with inter-bank business transactions without risking bankruptcy. The process of fractional-reserve banking has a cumulative effect of money creation by banks, essentially expanding the money supply of the economy.[4]

And further in the article, it describes the mechanism:

The process begins when an initial $100 deposit of central bank money is made into Bank A. Bank A then takes 20 percent of it, or $20, and sets it aside as reserves and then loans out the remaining 80 percent, or $80. At this point there is actually a total of $180 in the system, not $100; because the bank has loaned out $80 of the central bank money, kept $20 of central bank money in reserve, and substituted a newly created $80 IOU claim for the depositor that acts equivalent to and can be implicitly redeemed for central bank money (the depositor can transfer it to another account, write a check on it, etc.).

So, yes, money is created every time a bank issues a loan on fractional reserves. Is new currency printed? No, of course not. But the money supply most definitely expands.

Once again, it seems you're confusing currency with money. Money is the real medium of exchange in the economy. Currency is just a physical representation of it. And its the money supply that matters when examining the effect of fractional reserve banking on the economy.

Re:It's *money* which is the Ponzi scheme

[Anonymous Coward]

Once again, it seems you're confusing currency with money.

I understand the difference between money and currency, you chucklefuck.

The OP claimed that banks create "currency" when they issue loans:

when you borrow currency from a bank, it gets created.

What I said is that banks instead create the illusion that depositors' money is secure, and that no new currency is created. And oh hey that's exactly what what wikipedia says, which you even quoted:

and substituted a newly created $80 IOU claim for the depositor

So why don't you learn to read the thread and comprehend what you read instead of making asinine accusations?

Re:It's *money* which is the Ponzi scheme

[LunaticTippy]

It's more helpful to make an argument or post some links. Simply saying "citation needed" isn't helpful and makes you look like you are wikipediretarded.

I happen to agree with you but your lack of argument isn't helpful. It is annoying. Stop doing it, please.

Re:It's *money* which is the Ponzi scheme

[Abcd1234]

I understand the difference between money and currency, you chucklefuck.

The OP claimed that banks create "currency" when they issue loans:

Ah, so you were picking nits. Gotcha.

The money supply gets bigger. That's the ultimate effect, and that's the whole fucking point. The fact that new physical dollars aren't printed doesn't matter one whit. The point is more money enters the system, and it's specifically created by the banks at the time the loan is issued.

Re:"educate yourself! educate yourself!"

[Ornedan]

There is a general tendency not to admit one has been wrong after having invested in something. A result is that people who have been scammed are generally unwilling to believe they've been scammed, even when confronted with evidence. They'll rather make up flimsy explanations for why the evidence can't be right.

So, no, the sucker won't learn fast, if at all. And it won't be cheap, because those that do learn will end up paranoid, unable to trust other people ever again.

Re:"educate yourself! educate yourself!"

[Kjella]

Solid critical thinking skills start with a decent education. Decent education starts by making it free, neutral and accessible.

That's a good start, but critical thinking must also be focused on as a skill. It's far too easy to regurgitate a textbook and even regurgitate what other people have thought on the matter. In things like math it's easy to learn the method without understanding, and in things like science you spend a lot of time catching up with that others have done or experiments with an expected outcome that is more reproduction than experimentation. Linguistics teach you to express things but again doesn't really help critical thinking alone.

Sure, you can do more critical thinking on subjects already discussed to death by millions of scholars around the world, but given the tendency to google instead of thinking yourself it really only works on those who already want to think for themselves. To teach critical thinking you need to make them "think where no man has thought before". Make up a situation they won't find on google, ask them to argue some opinions, form arguments and give reasons for their logic. Unfortunately that is orthogonal to teaching them about the big and important events in history, which is so much more concrete and measurable. So we get people that know a lot about the world and understand little of it.

More money than brains

[tinkertim]

"If you don't have it, don't spend it"

Expand that:

"If you don't have it to burn, don't give it to someone who uploaded a youtube video after you had a few beers"

Expand that:

Never, ever watch youtube after drinking, while depressed or after consuming any other mind altering substance. If you do, give your car keys (and credit cards) to someone sober.

In the case of those who do very stupid things WHILE sober:

There will always be predators, there will always be fools, why is this news beyond the phenomenon being demonstrated on a larger scale?

Here is a great demonstration of a known phenomenon demonstrated on a huge scale:

Everyone reading this, find a way to escape gravity without assistance.

But, well since most cars have a big fat "USE YOUR SEATBELT" message on the sun visors, youtube should have a big fat "DON'T BELIEVE EVERYTHING YOU SEE ON THE INTERNET" message.

The problem is, stupid people often have brilliant children who depend on them. So, I'll agree with others who said stop spoon feeding common sense, at least then its agreeable to the majority who (could have) gotten it.

Capitalism is a Ponzi Scheme, too...

[agorist_apostle]

While I have no problem with capitalism -- or being part of a Ponzi scheme if they want to be -- consider this: almost all companies have a guy (or set of guys) at the top who make the most money. They have people working for them in progressively lower responsibility and lower-paying positions until you get to the guy at the bottom who does the most work and makes the least amount of money. Ponzi schemes need more "investors" while businesses need more "market share." People are promised more wealth if they can find new people to be part of the scheme, while workers in a company are promises more money and chances for advancement if they do well (never mind the fact that there are only a limited number of slots above, which are often filled based on personal factors, not merit). Just something to consider...

Re:Capitalism is a Ponzi Scheme, too...

[Zarf]

You have it just a little bit wrong. The labor the worker/slave produces is value. Precious value. The most precious value they have, the very stuff of their life. And they give it up. They give it to the guy at the top and in exchange they get money.

If the company produces any kind of product or service then the time is converted into this valuable thing. And that valuable thing is what the boss-man is trading for the money he has to pay the laborers for the slice of their lives they have sacrificed on the alter of the company.

For something to be called a Ponzi scheme, that necessitates that there is no intrinsic value in the trade. In other words I give you money in promise of more. You take my money and essentially give it to someone else while no value has been created anywhere. When I ask for my money back you go find another person (or twenty), take the money from them and give it to me.

If you charged someone interest, then you would be a bank. If you paid someone money so they could pay an employee ... and the employee created something that was sold for more than the employee's salary sending the profits back to you ... then you are an investor. If you take my money, invest it (remember the whole thing with paying an employee two or more links away from you) on my behalf... then you are a broker.

Remember the current crisis is a "banking" crisis because we started trading loans as if they were stocks. That's a relatively new idea (not a hundred years old yet IIRC) so we don't regulate it well. The reason that wasn't a Ponzi scheme is that the home owner pays interest ... essentially they create value at their jobs and turn that into interest payments.

The trick is that the scheme may be very close to a Ponzi scheme but at the very tail... hundreds of trades deep... someone is drawing a paycheck and/or creating something of value in exchange. Their cut maybe small but they are the ones creating value with the very stuff their lives are made of. That value creation is what keeps the scheme from falling apart.

The fact that the laborers create value by sacrifice of their very lives means value is created. Therefore you don't have a Ponzi scheme. My hunch is the fewer steps there are between the worker and the investor the more profitable the system is since there are fewer middle-men taking their cut and less chance that a fellow like Ponzi can hide where the money really went.

But. The differentiation between capitalism and socialism is who your boss' boss is. If your boss' boss is either the people (stock holders) or the government (the state) then you have either capitalism (stock holders) or a socialism (government officials).

Each system has its flaws. That's why America's capitalism has become a blend. Your drug company answers to share holders but it also answers to the FDA in the US and the EMEA (I think) in Europe. The blended approach seems to work well as companies remain profitable but also are prevented from absolute opportunism.

Consider... the Ponzi Scheme is illegal in the US. The reason is that no value creation is occurring. Why should the government care how profits are shown? A purely "laissez-faire" capitalism wouldn't care... right?

Now, there is something to consider.

Re:"educate yourself! educate yourself!"

[harry666t]

> working ^H^H^H^H^H^H^H voting

You sound like you believe in democracy.

~$400.000 ain't exactly cheap...

[denzacar]

Not Ponzi, but scam is a scam - sucker is a sucker...

http://www.foxnews.com/story/0,2933,453125,00.html

Her family and bank officials told her it was all a scam, she said, and begged her to stop, but she persisted because she became obsessed with getting paid.

And you sure as hell can't put it in your resume as "$400.000 worth invested in master's degree in fraud discovery and prevention".

But at least...

[denzacar]

...he likes salsa?

No... wait. You're right. He is a complete douche.

not only the un-educated

[Anonymous Coward]

I was invited to a 'Dinner Party with friends' recently, by an acqaintance of mine who is - u wont believe - a University Professor. It turned out that it was one of those schemes where people get 'given money' god how nice these people all are - until you asking uncomfortable questions about the scheme...
This professor - a nice lady whith delusions of being left-wing - had been several times there and thougth it was a great idea of getting roudn the greedy coprorate banks...

ahhh yes - no comment....

Re:not only the un-educated

[Anonymous Coward]

"u wont believe - a University Professor"

Actually, that's totally believable. PhD - Piled High and Deep. The arts and humanities are especially full of tenured idiots who would starve to death were it not for their perpetual existence in the warm cocoon of academia.

Re:not only the un-educated

[DrXym]

Dinner party is a common variant pyramid scheme. 1 person invites 2 more who invite 2 more who invite 2 more, each paying $1000 to join. 15 people must join the "dinner party" for the person at the top to leave. When they leave they take the $8,000 given by the 8 recent joiners and the dinner party splits in two and the cycle repeats. It can be seen that it doesn't matter how deep or unbalanced the pyramid is that, for someone to profit, 14 others must lose out when the scheme collapses. 93% of people lose. So your odds of winning are 1 in 14 but your return is only 8x your initial investment. Those are really shitty odds.

Additionally the scammers would load the top 7 names in the first "dinner party" with shill names. So if they pyramid took off they could walk away with 56,000 for no effort or investment at all, and probably more than that if they kept injecting own shills back into the pyramid while it was still healthy. Which they doubtless would do as well. So the number of genuine winners is considerably less than 7%. Oh and its all completely illegal so the cops will laugh at you when you complain.

There are other names for "dinner party" and the terminology but they're all much the same. Some variants of the scam are designed to appeal to women (e.g. women empowering women), some designed to look like magic investment schemes and so on. But at the end of the day, they're all similar and all mathematically doomed.

The point being that you'd have to be stupid to join a pyramid. Paradoxically, really smart people can be really stupid sometimes. Witness how many supposedly clever professionals get suckered by pyramid or Nigerian scams.

Re:"educate yourself! educate yourself!"

[helbent]

One of the statistics I had read years back illustrated that 87% of the people who get into these schemes lose their "investment" in the "course." 7 out of 8 get nothing at all.

To top that off, with any kind of pyramid-structured business, regardless of whether it is Mary Kay or Avon or the brand new Ponzi, Inc., you only get on average two people to come in beneath you, not the dozens that will make you millions.

This game works for those that are professional closers but they thrive off the expense of people who are professional losers. You'll make more money working part-time at Wally-Mart or McDunkie's.

Idiots are already legally made money out of ...

[Viol8]

Its called gambling.

Religious folk..

[Jeppe Salvesen]

.. I guess the devoutly religious are trained to suspend their disbelief and instead believe in miracles. The people who lost the most money in a recent pyramid/MLM scheme in Norway were more religious than the general population. That's what happens when you train people to be irrational..

Also watch out for Multi Level Marketing

[tezza]

A few of my relatives were almost taken in by Multi Level Marketers. These companies too are trying to grow via social internet means

These are barely legal organisations who sit _just_ on the legal side of the Pyramid definition.

Basically they try to sell overpriced financial restructuring products to people. Then if the customer does not want to become a purchaser, they try to convert the customer into selling the same products.

MLM people at the top earn more than people at the bottom.

Re:Also watch out for Multi Level Marketing

[CRCulver]

While hitchhiking in Russia, I got a lift in a brand new luxury car driven by two local Amway salesmen. Apparently Amway is huge in certain parts of the country. While multi-level marketing has faded in the United States, the Internet and the ability to expand to Eastern Europe have given it a new lease on life. I actually see Ponzi schemes as better than multi-level marketing. In a Ponzi scheme, the guy who takes your money may well not be someone you're closely acquainted with. With things like Amway, however, even if the org doesn't officially encourage you to harass your friends to buy stuff, that's basically what it comes down to in the end. Someone who gets into multi-level marketing hard core tends to end up alone and friendless.

Re:Also watch out for Multi Level Marketing

[theGreater]

People at the top earn more than people at the bottom. There, fixed that for you.

Re:Also watch out for Multi Level Marketing

[parnasus]

MLM people at the top earn more than people at the bottom.

I make more than the people who report to me. The president of the company makes more than I. Does that make it a pyramid? Not defending MLM, but you will always see people in higher positions making more money.

Yes, the law is smarter than that.

[91degrees]

Just because you say it's "giving" doesn't actually mean it is. The legal system recognises that sometimes people will misrepresent the truth for personal gain.

When it's quite clear that the intention is to set up a pyramid scheme - and it is quite clear, to any reasonable person, that this is the intention - then it will be treated as a pyramid scheme. The "It's not a pyramid scheme" defence isn't going to cut it here. The government - scoundrels that they are - will even employ someone to present the argument over how this is not just giving.

Re:Yes, the law is smarter than that.

[Zarf]

I suppose if you put rules on the recipient of the "gift" on what they must do next... or fees they have to pay to get the gift... then it's not really a gift is it?

Re:Yes, the law is smarter than that.

[Anonymous Coward]

Exactly. The prosecution would have to be incompetent not to come up with that argument.

Re:"educate yourself! educate yourself!"

[Velex]

Want to see an economy tank all we need is a couple million illiterate people come of working age.

Oh shi—

Some History

[Anna Merikin]

Wall St. as we know it started out as a way to make gambling on stocks seem a constructive activity: they rationalized that they were creating pools of capital to increase industrialization.

It is a legal and regulated form of gambling including elements of Ponzi, pyramid (especially fiat currencies) and other fraudulent bits that is seen as socially useful.

Like organized sports, started about the same time, and sanctioned boxing bouts, the social good was thought to be improved by regulating behaviors that could not be stopped.

Hey Barack, your boy was found guilty!

[Anonymous Coward]

http://www.nbclosangeles.com/news/local/Jury-Reaches-Verdict-in-Spector-Case.html

BARACK OBAMA ROCKS!!! LOL!

Pyramid != Ponzi

[demiurg]

Ponzi scheme is not the same as pyramid scheme.

One important difference is that with Ponzi scheme you do not receive any real, i.e. not on paper, profit immediately.

Ponzi Scheme == Dot-Com business plan

[Anonymous Coward]

A year or two ago I was looking to join a new start up but I was looking for one with staying power. So asked each to explain their business plans... all of the ones that were based on "social media" were basically using a multi-level marketing or a Ponzi Scheme but just hiding it behind fancy technology.

Now I'm not saying all social media sites are ponzi schemes or multi-level marketing schemes ... just the ones I interviewed with. There are sites with legitimate subscription plans and profit making schemes... but some of these are just using investment from one group to show as "profits" to another without really providing anyone with any genuine service. If your "plan" is to get bought out by another company then you really don't intend on pursing profitability you are trying to pay your first set of investors from your last set of investors.

Suckers?

[jandersen]

'there's a sucker born every minute,'

What amazes me is not that there are so many that fall for scams, but that people seem to admire those that perpetrate them. Otherwise, how does one explain that this kind of saying is used so widely?

Re:Suckers?

[IHC Navistar]

"What amazes me is not that there are so many that fall for scams, but that people seem to admire those that perpetrate them. Otherwise, how does one explain that this kind of saying is used so widely?"

-----People do NOT admire the bottom-feeders that perpetrate such scams. The saying has stuck around for as long as it has because people seem to fall for just about the most obvious scams that can be developed, and lose not just a couple of dollars, but sometimes MILLIONS of dollars, and those of us who are not stupid enough to fall for them are left wondering how this can happen over and over and over again. It happens over and over so many times, that one *has* to believe that there is a sucker born every minute.

*THAT* is why the saying has been around for so long. That, and the fact that it explains why there are so many gullible idiots in a way that is simple, yet the stone-cold truth.

Re:Suckers?

[jandersen]

I can see you feel strongly about this, but I think you have to admit that it is common in America to admire successful business people, and that being successful in business often involves a certain amount of bending the concept of honesty - just take the cosmetics industry as an extreme example, but also to a great extent food and health products. Cosmetics in particular is sold largely on what can only be called misinformation - lies, in plain English. IOW, people are not without a certain degree of admiration for what is basically dishonesty. This is also in thread with the tendency to romanticise persons like Billy the Kid etc.

And of course, something similar is implicit in the unmistakable contempt for "suckers" and "gullible idiots". Apart from all that, it is true that "suckers" are born all the time, since we're all born naive.

Re: Ponzi schemes...

[cagrin]

I'd take the ponzi schemes on youtube over the ponzi scheme of the banks any day. At least the ponzi schemes on youtube you can ignore. Be careful of posting news like this, our so-called leaders are looking to kill the existing free-speech internet. If people are ignorant enough to get involved with a ponzi scheme it is the fault of their parents and education system for not explaining what a ponzi scheme is.

59,192,963 views

[mpcooke3]

If you believe there was really 59,192,963 views of those videos then I'm afraid you are the sucker.

No its about the Fed buying t-bills.

[tjstork]

No, the big deal is that the Federal Reserve Bank is using its lender of last resort power to buy treasuries directly from the government. Partially because the government has so many to sell, partially to shift some of the TARP costs back to the Fed where it arguably belongs and partially to manipulate the price of Treasuries so that the US Gov't gets a better rate.

It really is circus economics. Essentially the Central Bank of the United States is printing money to finance the operations of the United States Government. It's the sort of crap that third world countries do. It's appalling that federal spending is so out of control that we have reached this point.

Re:No its about the Fed buying t-bills.

[Copid]

Partially because the government has so many to sell, partially to shift some of the TARP costs back to the Fed where it arguably belongs and partially to manipulate the price of Treasuries so that the US Gov't gets a better rate.

And mostly for the reason it usually does so: to encourage savers to do something other than buy US government debt and invest their money in businesses.

Hmmm, there is a difference...

[tjstork]

Cry me a river Sophie! There is quite a chance that the national debt will mean nothing at all to any of us or our grand children. This is the old right wing scare tactic and nothing more.

In case you haven't realized, there's not enough people to buy t-bills to finance the debt at a rate the government can live with, so the federal reserve is printing money to buy up to about a 300B worth in addition to the trillion dollars worth it already holds. So we're printing money to pay for things, and, that's the kind of crap third world countries do. The only reason we can get away with it is because the dollar is the reserve currency of the world and now everyone has to pretend that the dollar is still worth the same as it was before, even though the Fed is printing away, otherwise, they lose all of their stuff.

I wouldn't cry a tear for these dollar holders overseas those. By and large these people are holding dollars in an attempt to keep their currencies relative to the dollar so they can export more junk to the USA. Like the Chinese, Japanese, you name it.

So what the Gov't is doing, in the big picture, is to take advantage of the fact that our trading partners are trying to use our own currency to screw us, and are instead using that to go buy massive amounts of stuff with it.

Meanwhile, the those of us that save have to run the risks of having all of our assets getting wiped out because of defacto dollar devaluation. What really sucks is that dickering over exchange rates is absolutely the worst way to mediate trade. It would be so much simpler just to set up quotas and tarriffs and have some protectionism, then it would be to screw up the entire money system of the world.

Oh, but the Fed is creating money now..

[tjstork]

You are right, its unusual for the Fed to just flat out create money, but they are doing it now and at a pretty good clip. That's their job.

The problem isn't the Fed. The Fed is doing what it is supposed to do, being the lender of last resort to keep the money supply from collapsing. IT's the people crawling up to Fed looking for dough that's the problem, first the banks, then the insurers, and now the US gov't.

AAAaaa

[knightf0x]

Ohh.. you said Ponzi...not Fonzi

My Bad

Re:AAAaaa

[Anonymous Coward]

You've just jumped the shark with that joke my friend.

A lot of people make money that way.

[tjstork]

Ponzi scammers rely on people not making immediate withdrawals. If you invested with Bernie Madoff, then closed your account after a year or two, you made a -ton- of money, because Bernie always paid people withdrawing right up until the thing collapsed. It's all the people that sit in the system, that get screwed.

Ponzi or Pyramid, there is a difference

[cbc1920]

Can we please stop using these terms interchangeably? They're totally different scams. The pyramid scam can be quasi-legal since it doesn't necessarily involve lying to the new members, just hoping they're gullible enough to think they are near the top of the pyramid. A ponzi scheme only has ONE person/group at the "top" and works by convincing members that the scam is a legitimate investment, and is definitely illegal.

TOTALLY DIFFERENT IDEAS

You mean I can just print the $5?

[Colin Smith]

The $5 comes from work - you know, the means of selling goods and services to generate income.

Wow. Missed the pea, even though I pointed right at it. Amazing. And modded informative too.

No really. Where does the $5 which doesn't exist come from? I mean... It literally doesn't exist. How can I create $5 by working? Your average Joe in most countries aren't allowed to print money. You see, I could personally, by hand, build a skyscraper, but if there is no $5, it can't be worth $5.
 

Re:You mean I can just print the $5?

[Wildclaw]

In the scenario below, Dick will loan money from Sam so that he can buy a farm from Sam. After the farm is bought, Dick will work to produce carrots which will enable him to pay back his loan. (including the interest that you are claiming can't be repaid because it doesn't exist)

* Start
- Sam: Cash $100 Farm: 1
- Dick: Cash $0

* Sam loans $100 to Dick with a $50 interest
- Sam: Cash $0 Loan: $150 Farm: 1
- Dick: Cash $150 Debt: $150

* Dick buys farm from Sam for $100
- Sam: Cash $100 Loan: $150
- Dick: Cash $0 Debt: $150 Farm: 1

* Dick works hard and grows carrots on his farm. Finally, he sells some of his carrots to Sam for $100
- Sam: Cash $0 Loan: $150 Carrots: Lots
- Dick: Cash $100 Debt: $150 Farm: 1

* Dick repays $100 of his debt
- Sam: Cash $100 Loan: $50 Carrots: Lots
- Dick: Cash $0 Debt: $50 Farm: 1

* Dick works ons his farm to produce some more carrots that he sells to sam
- Sam: Cash $50 Loan: $50 Carrots: Huge amounts
- Dick: Cash $50 Debt: $50 Farm: 1

* Dick repays the rest of his loan
- Sam: Cash $100 Loan: $50 Carrots: Huge amounts
- Dick: Cash $0 Debt: $50 Farm: 1

I hope that should give you a good idea of how real economy works. Where did the extra $50 in interest come from? Simple, it came from the work that Dick did so that he could sell carrots to Sam. Dick had no problem paying back $150 in an economy where only $100 exists. Why did it work? Because money circulates.

The exact same thing is true with banks. What they demand in interest is an expectation to get some of your production in exchange for providing you with liquidity so you can increase your production. Of course, when that liquidity is wasted on speculating in stocks and houses instead of actual investment, everything goes bad.

Re:You mean I can just print the $5?

[Anonymous Coward]

Wait how the hell does Dick get $150 when Sam only had $100? And then how does Sam still have $100? Your post is all fucked up. Who modded this informative?

Re:You mean I can just print the $5?

[Wildclaw]

Wait how the hell does Dick get $150 when Sam only had $100?

Just a typo

"Dick: Cash $150 Debt: $150" should be "Dick: Cash $100 Debt: $150" which becomes evident when you look at the next action which is Dick paying $100 for the Farm and having $0 left.

Bad assumption

[The Cisco Kid]

59 million views of the video does NOT equal 59 million people taken in by the scam. While there are a great many fools out there, there are actually people who can view/read/see a scam, and just laugh at it, recognizing it as a scam.

Re:"educate yourself! educate yourself!"

[jabithew]

Short-term greed often overcomes critical thinking skills. Look at all the banks who invested in *cough* AAA assets which nevertheless returned above 10% of the investment.

Not many of them asked key questions, like "what is this magic risk free business that creates a lot of profit?"

And who is going to collect?

[SmallFurryCreature]

Bad debt happens on country level all the time. What are you going to do, send the bailiffs on someone who can answer the question "and whose army?"

Much is made of the Chinese calling in the US debts, but what would China be without exports to the US? The world has become far to complex for childish tricks. Unless someone has a compelling reason to create turmoil, then the system can go on forever. That is the one part of the middle class idea that really works. The more middle class chinese there are who earn their living with trade, the less the will to upset this style of living with something as silly as calling in debt.

Granted, the current system is extreem but if the US economy collapses to many other economies will as well. The last thing the Chinese goverment right now wants is to tell its own people the economic welfare their communist leaders have created is about to end. Rich with no freedom is a lot easier to swallow then becoming poor with still no freedoms.

Re:"educate yourself! educate yourself!"

[tucuxi]

In things like math it's easy to learn the method without understanding [...]

I disagree about math in general. Proving theorems requires a lot of creative thinking. You may be thinking about good old canned integration formula substitution; but there are parts of math that are every bit as challenging as writing clever code.

On the other hand, few get to the interesting part of maths, or to the interesting parts of history (when you learn that there is only rough consensus on certain events, but very little certainty), or have teachers that are willing to explain that much of what we currently "know" about the world around us is still open to new answers.

Too many teachers treat their textbooks as the Holy Writ, and fail at stimulating curiosity and critical thought. Teaching the experiments is nice, because it allows you to get a glimpse at the long sequence of stumbles that have lead to present science. I would love to lay my hands on an "introductory physics" textbook of a few hundred years in the future.

Vast majority of people always lose money

[DrXym]

Read up on any kind of pyramid scheme and the first thing that strikes you is that when they (ALWAYS) collapse the majority of people will lose their money. In a typical scheme something like 90% of the people come out with nothing. Mathematically guaranteed. And those losers are going to be really pissed off (not with their own stupidity of course) which means acrimonious disputes, assaults and all sorts of fun fall-out as people scramble to come to terms with losing everything.

Thirdly just because 10% of people seem to make money doesn't mean anything. The scammers who set up the scheme loaded the top of the pyramid with their own shill names. So Fred, Jack, Sue and Bob might occupy the top of the pyramid, but really they're all working together and never staked any of their own money either. And they're all gone well before the scheme collapses. So yeah, you might be a lucky non-shill and make some money (at the expense of friendships etc.), but vastly more likely is you will lose everything.

If you really want to blow money, go stick it on a horse or a spin of the roulette wheel.

Re:Vast majority of people always lose money

[gnasher719]

For about the worst pyramid scheme in history:

http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm

Result: 2000 people killed.

Onzi is a deceptive investment

[peter303]

Social Security has been out front about what it does. In fact I believe its been too out front and pessimistic.

Re:Onzi is a deceptive investment

[Nitage]

In a traditional Ponzi scheme people are tricked into investing. In the Social Security Ponzi scheme, people are forced into investing. So traditional Ponzi schemes collapse when the fraud is discovered - but Social Security will collapse when the people being forced to invest can't afford to.

Did his analysis

[Anonymous Coward]

Did his analysis include the stock market dropping in value by 50%?

Just curious. Might not be applicable if he didn't.

Re:Did his analysis

[cayenne8]

"Did his analysis include the stock market dropping in value by 50%?"

You have to look at the investing in the market long term. Sure, there are fluctuations, and corrections. But over the long haul...so far, it makes money. Sure, if it drops 50% right now...there are some losses, but, it will go back up. And at a loss today, you still have a market that is higher than it was decades ago when you started.

If the market were to totally fail, and collapse....trust me, there would be no government money to put into programs like SS. We'd have many more problems to worry about if the whole thing fails.

Maybe I'm over optimistic, but, I think things will start to improve in the near future. I personally am wanting to try to start buying stocks now...while there are bargains to be had.

Re:Did his analysis

[Nursie]

"You have to look at the investing in the market long term. Sure, there are fluctuations, and corrections. But over the long haul...so far, it makes money. Sure, if it drops 50% right now...there are some losses, but, it will go back up."

And that would be fine if you had a long term choice of when to retire.

I'd say yes, you're hopelessly optimistic.

Re:Did his analysis

[Dishevel]

Its actually nice to hear someone speaking the calm truth. Mostly what I get to hear all week at work are people parroting the news medias bias that the country is going down and we must hand over all our money and power to the Government so they can save us bullcrap.

Re:Did his analysis

[orthancstone]

Long term investing is nice and all, but if you heavily invested 10 years ago with the idea of retiring soon...you are back where you started (in fact, you likely are worse off due to the value of stock being much below what you would've paid for it between 03-late 07). The article talks about someone who started investing nearly 40 years ago; a great idea, but that doesn't apply to the majority of the unwashed.

Side point: Yes, right now is a great time to get back into the market. Growth will be slow for a while (we may even see another short slide), but things are looking steady again.

Re:Did his analysis

[Chibi Merrow]

If you're looking to retire in ten years, you shouldn't have all your money at risk...

Re:Did his analysis

[cayenne8]

"And that would be fine if you had a long term choice of when to retire."

If you do the smart thing, and think long term, this would not hurt you much either.

YOu start investing young, as you start to close in on retirement age, you start moving money from the more risky stocks to safer things, like maybe bonds, etc.

If you are a few years from retirement, you should not have all your money in very volatile stocks, that's just common sense.

Yes, you DO have a choice of when to retire. Anyone that can do simple math knows when they'll hit retirement age, and they should plan accordingly.

You do realize this puts a bit of responsibility on the individual, right? Nothing to be scared of....

Re:Did his analysis

[orthancstone]

True. However, with the daytrader fad and most people being fairly untrained in terms of retirement financing 10 years ago, how many of your average joes knew that?

A few years ago when privatized social security was being discussed, where do you think most people would've told you their money would be invested? In the stock market, of course. And the media's treatment of it all didn't educate people on leaning towards fixed income/safe return investments for those approaching retirement age.

Re:Did his analysis

[Anonymous Coward]

You should start moving your money from long-term investments to less profitable, but more stable and liquid short term ones at a good time before you retire. Like, start looking at that at least a few years before you retire.

Re:Did his analysis

[cayenne8]

"Long term investing is nice and all, but if you heavily invested 10 years ago with the idea of retiring soon...you are back where you started (in fact, you likely are worse off due to the value of stock being much below what you would've paid for it between 03-late 07). The article talks about someone who started investing nearly 40 years ago; a great idea, but that doesn't apply to the majority of the unwashed. "

As I mentioned in another post...part of this plan is PLANNING. As you start getting closer and closer to retirement age, you start moving from riskier stocks to more steady money areas like bonds and treasury notes...etc. Stuff with very little risk.

If you've done things right, the current corrections and drops in the market should not really affect you that much.

Re:Did his analysis

[cayenne8]

"True. However, with the daytrader fad and most people being fairly untrained in terms of retirement financing 10 years ago, how many of your average joes knew that?

A few years ago when privatized social security was being discussed, where do you think most people would've told you their money would be invested? In the stock market, of course. And the media's treatment of it all didn't educate people on leaning towards fixed income/safe return investments for those approaching retirement age."

Since when did it happen that we accepted that being a stupid, uninformed person was the norm, and that we should not only cater to the lowest common denominator, but, protect them from themselves???

It seems that for some reason now, "Average Joe" == Brainless Idiot unable to make own adult decisions for life and future.

Re:Did his analysis

[orthancstone]

I'm not happy about it either, but it is the truth of how things are currently handled.

This is precisely why I argued against privatized social security in the first place. You know damn well that a few million morons would piss it away and then bitch at the gov't to make it all better for them. In other words, they'll ask for the general public to insure their stupidity.

Re:Did his analysis

[networkBoy]

You do realize this puts a bit of responsibility on the individual, right? Nothing to be scared of...

You and I must not be in the same country... I live in the USA, where are you?

Re:Did his analysis

[AuMatar]

I don't think you've looked at the long term. Look at a lifetime graph of the DOW.

It started at about 100 in the mid 20s. It peaked at 330 in 1929, then fell to 70 after the crash. It then took a *long* time to recover- it was next 300 in the mid 1950s. Over 30 years it went up a factor of 3.

After that it increased to about 900 in 1982. Over 30 years it went up a factor of 3.

Then the laws changed and 401Ks were invented small investors changed from banks to stock. This didn't change the actual capital owned by the companies or the profits of the companies, but more money in the market chasing the same number of shares caused a massive bubble. 30 years later the market is at 14K- a factor of 17 over 30 years.

One of these 3 numbers is not right. And if you guessed one of the first 2- nope. The market is still hyper inflated right now, to get to realistic P/E and dividend yields it needs to drop down to 3-4K, not its current 7K+.

So no, the stock market is not the magic money maker some people seem to think it is. It does go up over the long term, but much more slowly than it has been. On top of that is the issue of risk. SS is really called SSI- Social Security Insurance. Its point isn't to make your rich- its to make sure you have a certain minimum amount so you can live off it (if barely) should your other investments tank. For an insurance you want as low of risk as you can possibly get. Allowing people to invest it in the market is idiotic, and counter to the entire point of the program. And it would leave us with a big problem in 20 years- what do we do with the people who lost it all? Let them starve? Or create SSv2.0, where we just give them a small stipend- basically exactly what we have now. Not to mention- the people least qualified to wisely invest their money (those who don't have other savings they manage) are the ones who need SS the most. Why the hell would you want to increase their risk factor?

Re:Did his analysis

[Chibi Merrow]

they'll ask for the general public to insure their stupidity.

Which is what we're doing now with the current social security system. At least with partial privatization, SOME of us could have a chance at having a decent retirement.

Re:Did his analysis

[Ihlosi]

At least with partial privatization, SOME of us could have a chance at having a decent retirement.

Huh? As long as saving and investing isn't outlawed, there's always a chance at having a decent retirement.

Re:Did his analysis

[Chibi Merrow]

Excuse me for not explaining myself better... At least SOME of us will be able to actually get SOMETHING out of the money the SSA leeches from our paychecks.

Better?

Re:If you can't think, moderate!

[Anonymous Coward]

You probably hurt someones feelings.... don't let it bother you.

Woohoo! You mean I CAN print $5!

[Colin Smith]

People create money when they create value.

Really? In what way can I create money? Can I print it (I thought people went to prison for that)? Can I dig it up? Where does my missing $5 come from? I mean exactly.

 

And the abuse of moderation continues

[drinkypoo]

Which happens first, do the trolls targeting me run out of modpoints, or do I run out of karma for posting at +2?

Re:And the abuse of moderation continues

[interkin3tic]

Either there are a lot of people who believe so strongly in the free market that they're attacking you with their mod points for implying it can't solve absolutely everything, or there are a lot of pricks who live in mansions who are worried there is going to be a riot and you're going to burn them if you have enough karma.

I'm not sure which would be more out of touch with reality.

Ponzi using maths

[Anna Merikin]

My uncle was one of the actuaries who originally figured Social Security out. He was called out of retirement in the 70s iirc to brief Congress on the mathematical bases for the programs, which had been forgotten or lost.

He explained it is a successful Ponzi scheme as long as more newbies are enrolled than retire. That figures. A government-controlled Ponzi scheme based on generational population growth. It fails when population declines. Currently, the U.S. is growing in population because of immigration; otherwise, US pop would have continued to decline since the early 70s.

NB: The biggest baby boom in history is happening RIGHT NOW!

Re:Ponzi using maths

[operagost]

Too bad most of the immigrants are her illegally and contribute little or nothing to social security.

Lotto - legal extreme pyramid scam

[Anonymous Coward]

Lotto is just an extreme form of pyramid scam. A couple of guys get the 6 numbers right and pocket the money of all the losers, after the state takes 40% for itself.
But it's legal, the rules are transparent and people need dreams more than savings slowly growing up in their savings account.

Really? In what way can I create money?

[pentalive]

You make money the old fashioned way, you earn it.

You make and sell stuff. You can make and sell actual stuff or you can 'make' work for a Boss who buys your work for a paycheck.

1)Grow a tree.
2)harvest the fruit.
3)sell it.
4)note: no ??? step.

Re:Really? In what way can I create money?

[Anonymous Coward]

He is actually talking about paper money, not fruit.

Re:"educate yourself! educate yourself!"

[Anonymous Coward]

so you sit and watch capitalism fall apart at the seams, and then chose to talk about the tired old socialism that has failed throughout history

a lot of people would say that people as stupid as you deserve everything you get - pyramid schemes and all.

i guess that i'm slowly becoming one of them :)

Re:"educate yourself! educate yourself!"

[Anonymous Coward]

No, I don't believe in democracy at all. As has been said before Democracy is 3 wolves and a sheep voting on what to serve for dinner.

I believe in a Constituional Republic wherein the power of the central government is strictly limited, and powers are reseved to the member States and the people. That was the great promise of America, but it wasn't long before the corruption at the basis of human nature took hold and began distorting the carefully balanced government.

As has been attributed to historian Alexander Tytler:

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world's greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:

                * From bondage to spiritual faith;
                * From spiritual faith to great courage;
                * From courage to liberty;
                * From liberty to abundance;
                * From abundance to complacency;
                * From complacency to apathy;
                * From apathy to dependence;
                * From dependence back into bondage.

We are at the final stages of this progression, I fear.

Roll with the CASH DUKE

[Anonymous Coward]

My favorite is definitely the CASH DUKE. http://www.cashduketriple7doublewhatwhatmoneysupplyincomemuse78dotcom.com/

Happy Dude

[Anonymous Coward]

Greetings, friend. Do you wish to look as happy as me? Well, you've got the power inside you right now. So use it. And send one dollar to Happy Dude, 742 Evergreen Terrace, Springfield. Don't delay! Eternal happiness is just a dollar away.

Re:"educate yourself! educate yourself!"

[TheQuantumShift]

There's a city in the desert and several Native American establishments that would beg to differ.

Re:"educate yourself! educate yourself!"

[hachete]

A lot - no, nearly all - of the people who lost their money in the recent scams were nearly all highly educated people.

Highly educated != the ability to see a scam coming.

But I see you're someone with an axe to grind just looking for a hook ...

Re:"educate yourself! educate yourself!"

[onkelonkel]

Cognitive Dissonance - "It can't be a scam, because I'm too smart to fall for a scam"

You speak the truth

[__aailob1448]

I think the reason why we are taught the way you describe is a question of cost. We are like geese being force-fed the concentrated intellectual achievements of other people. There is not enough time to allow people to forage on their own and get a taste of what the quest for knowledge is really like.

It requires less teachers and less time to mass-educate people that way. Whether this makes up for the shortcomings of this method is tough to say.

Increasing wages not population

[Anonymous Coward]

social security matches short term inflows of cash to short term outflows of cash.

As SS is levied on wages, it is necessary that {wages * SS_Rate} keeps pace with short term outflow

Short term outflow will follow an increasing trend over time as more people retire and collect payments.

To keep up with constantly increasing outflows we require either constantly increasing {wages * SS_Rate}

Increasing wages does not necessarily require increasing the population. Even a shrinking population, which is getting paid progressively more over time can lead to sufficient income to maintain SS

Furthermore SS ingoing and outgoing cashflows are in nominal amounts not real amounts.

So if real wages can't keep pace with SS liabilities it probable that nominal wage increases could make up the difference (inflation)

Treasury debt is not callable

[Anonymous Coward]

It is sold off at various fixed maturities
3 month
6 month
1 year
5 year
7 year
10 year
20 year
30 year

you can buy Inflation indexed (indexed to CPI) treasuries of various maturities as well.

The treasury does not set the yields on its debt. The debt is sold at auction, and the effective interest rate is controlled by what market participants are willing to accept.