A Ponzi Scheme applies to any investment scheme where the promoter offers crazy returns to attract investors. If you invest your money in such a scheme you might even get it back – plus some crazy rate of interest – as long as there’s still a flood of money from new investors. The scheme is still as bankrupt as heck, however, and once the flood of new money dries up the entire scheme collapses. [Sounds familiar? Right.] That’s the planet we live on now. Everyone’s borrowing, no one’s paying – and one day, the merry-go-round [of financial insanity] will stop.
So writes Mitch Feierstein (www.planetponzi.com) in edited excerpts from his original article* entitled What is a Ponzi Scheme?.
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Feierstein goes on to say in further edited excerpts:
…I am a hedge fund manager who’s spent thirty years working in the financial markets. As a result, I know a lot about the world’s financial system and how it works but you don’t have to be a technical wizard to understand these things.
- The government of the United States owes 100% of American GDP. That’s financial insanity.
- The Federal Reserve is charged with preserving the value of the currency, but it has printed trillions of dollars in new money. When inflation is galloping away and the Fed doesn’t even know where those trillions have disappeared to. That’s financial insanity.
- The Congressional Budget Office tells us that Medicare spending is going to bankrupt the budget….a cost tsunami which will utterly destroy every fiscal rule ever invented. That’s financial insanity.
- The Tea Party crowd want us to cut taxes, even though we don’t have enough revenues to cover our expenses as it is and a tax cut, when the nation is in deficit, is really a tax increase, because you have to pay the money back again, and with interest. More financial insanity.
- Wall Street bosses pay themselves extraordinary bonuses even though their stock prices are tanking. That’s not capitalism as I ever understood it. You can call it financial insanity if you wish, or criminality if you prefer. Either way, I don’t like it. These things aren’t confined to the United States. In Britain, we see the same thing: investment banking bosses trashing their company’s share price, bankrupting the government, causing a massive recession – and walking away as multi-millionaires. In Italy, we see Silvio Berlusconi, the political world’s greatest idiot, presenting an ‘austerity budget’ to Parliament which would make him personally €750 million richer. That’s financial insanity.
- The Greek government has been obviously bankrupt for years, but it’s taken till now for Europe to recognize the fact. Financial insanity.
- The European Union announces a ‘rescue plan’ that will impose vast costs on the ‘strong’ governments, but which has obviously failed within a couple of days of the announcement. More financial insanity.
It’s all insane, and not just insane – it’s wrong. Ethically, financially, and socially wrong. Much of it is also, in my opinion, illegal and should be punished by long terms in jail.
This blog is about these issues.
- It’ll shout out when politicians and bankers do things wrong.
- It’ll cheer on those rare occasions when politicians get things right.
- We’ll also talk about the dollar in your purse, the pound in your pocket.
- The value of your savings is under threat and, as a professional investment manager, I’ll share with you my philosophy on how to preserve your savings from destruction.
These are dangerous times and they’re only just starting.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
Countries around the world, particularly in the West, are hopelessly in the red, with debt rising every day. Even worse, politicians seem paralyzed, unable — or unwilling — to do anything about it. It is a global disaster that threatens the immediate future… [Let me explain.] Words: 1132
Every single day the U.S. economy is getting weaker. Every single day we are going into more debt. Every single day we get closer to the collapse of the entire system but time is running out. The entire U.S. financial system has become a gigantic shell game (a confidence trick to perpetrate fraud) but when it ends the consequences can be painful and, sadly, that [pain is eventually going to be ours to experience. Let me explain.] Words: 1483
Whatever one may think of the Mafia, they are bit players in contrast to the central banking clan, the most ruthless collection of individuals ever assembled. The Bilderbergers do not break legs or use baseball bats against their intended victims. No, they are far more sinister and lethal. They use money, instead.
Many households, financial and non-financial firms and government, may well spend the next decade in debtor’s prison having to tighten their belts to pay for the losses inflicted by a decade of reckless leverage, over-consumption and risk taking. What fools we have been for living beyond our means all these years and taking no fiscal responsibility for our future well-being in the false hope that there always would be a ‘greater fool’ out there than us. Words: 1230
The definition of insanity is to continue doing something that goes wrong, without contemplating that there could be a different course of action…[and we] are heading deeper and deeper into insanity…we are just getting deeper and deeper into problems leaving our children and grandchildren with loans that could well take decades to finish (paying) off. I fear we are now stoking up the conditions, at some point in the future, for serious inflation.