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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."
Surely these are pyramid schemes rather than Ponzi schemes?
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.
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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.
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.
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.
.. 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..
Stop the brainwash
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.
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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.
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.
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.
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
The more you regulate a company, the worse its products become.
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.
This is my sig.
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.
"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.).
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.
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?
I still have more fans than freaks. WTF is wrong with you people?
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.
SIGSEGV caught, terminating
wait... not that kind of sig.