Wednesday, May 11, 2011

What Is A Ponzi Scheme?

I refer to the term "Ponzi Scheme" often and referenced it most recently yesterday in Who Pays For The EU Bail Out? 

I assume that most understand the concept of a Ponzi scheme due to the recent popularity of Bernie Madoff, but for those that do not the following graphic is a helpful visual representation of the structure.

Investors who invest early (and cash out) are safe, but those that enter last end up losing everything.


If you can understand this simple process then you can move on to the understanding of how money is created under our current financial system. This is also known as Modern Money Mechanics, a handbook created by the Federal Reserve.



When an American understands both the Ponzi graph above and the video below simultaneously, it is the equivalent of waking up from the Matrix that our current financial system is structured within.

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