In a Ponzi scheme a group of investors receives profits which are money taken from other investors.
First round: The schemer takes $100 from each of two investors.
Second round: The schemer pocketed $200. Now he needs to find an additional four investors to collect $400 and pay the returns promised to first two investors.
Third round: Eight investors. In the third month the schemer owes $800, so he needs to find eight new investors. And he needs to obtain more than $100 from each of them if he wants to keep any money.
Next round: Sixteen investors. And so on.
By the 10th round he’ll need to find a new group of 1,024 investors. By the 18th round he would have to come up with over a quarter of a million investors.
The top of the pyramid feed off its base. And when it runs out of people to scam it collapses.
(Look up The New York times as quoted by smartinmoney.)
World finance is a giant Ponzi scheme
In the world of banking, by a device called fractional reserve, banks are required to have only $10 in deposits for every $100 they lend. $10 generates $90. $100 creates $900 and so forth. No real money, but double entries in computer screens. In a $900 loan, one entry goes into the bank’s lending portfolio as a liability, and another entry as a credit in the borrower’s account in exchange for his promise to pay back with interest (a promissory note). The borrower then, spends the money into the economy and that becomes the money supply.
In order to maximize profits to attract investors and compete against other banks, lending institutions need to continuously find new borrowers. Eventually the whole world becomes borrower, and when there are no more borrowers the house of cards collapses. That’s why they expanded into the subprime market. They begun lending to people who didn’t have the ability to pay back. Subsequently compounded the problem by bundling up bad loans into securities and reselling them, creating a several trillion dollars global meltdown, and then asked the government (the taxpayer) for bail.
The entire money supply is created by bank loans. 99.9 percent of the money supply consists of debt to private banks. By creating loans banks create money. Dollar bills are created by the private Federal Reserve and lent to the government. The Bank of England begun the scheme in 1694 and it has lasted 300 years. The international banking cartel exhausted the Third World and now is back to feed in the metropolises.
The now defunct Bank of Boston made billions in Latin America by lending at high interest. When local governments round the world opposed the abuse of multinational corporations they were rapidly deposed in the name of anti-communism and free enterprise.
In order to avoid collapse of the entire world (with the few exceptions of countries and regions that avoided British financial colonization) central banks have to be abolished and control of the money supply turned back to the people. There is a growing realization about the predatory nature of central banks and some organizations are advancing proposals for their replacement. Consider lending your support to the American Monetary Act.