Finding someone who has never been conned in their lives is almost impossible in today’s day and age, especially when the world economy in recent times is considered.
Every now and again a new pyramid or more eloquently phrased...Ponzi scheme is exposed to the world, with thousands of people up in arms, tears rolling after having lost their life savings in yet another angle on the same old trick.
There used to be a time I felt saddened for them, but with the frequency and volume of schemes being exposed during the past couple of years, I must admit, that stupidity and greed are mutually inclusive with this type of investor.
The age old phrase “if it sounds too good to be true, it probably is...” comes to mind, once again confirming that our parents and grandparents carried such wisdom for good reason. I suppose you have to make your own mistakes in life... even though the costs involved in the school of life could be unbearable sometimes.
The concept of something for nothing normally works both ways in every financial scam, as most of the people getting taken for a ride are also looking for easy money, making them soft targets for the guy (or gal) who sells these possibilities to them.
Sure, I also know lots of people are only uninformed as to when they are being conned, and my heart bleeds as much for them as my hatred runs for the people who involve them in these schemes, where they end up losing everything at the end of their working lives.
So, the Ponzi scheme then... normally only exposed when money stops flowing into the accounts to repay ‘investors’, making it by definition unsustainable as something is promised for nothing.
Berny Madoff managed to get away with it for decades, and had it not been for the 2008 financial meltdown, he would still have been at it today, after pulling off the biggest Ponzi Scheme ever recorded, with losses running into the tens of billions. Incidentally Madoff was a non-executive director on the NASDAQ when he was caught out.
The point made here is that the principles of the international financial markets changed rapidly during the past years, in an effort by banks to increase the market capacity, without expanding the markets.
This means they simply wanted to get more trading value out of each trade, instead of more markets, or players in the market... hence the appearance of derivative trading, something that has two elements in common with gambling; speculation (bets) and insurance. If you’ve ever played Blackjack, both the former and latter will be very much known to you.
The first time the world experienced an economic catastrophe was when the fall of the Roman Empire assisted in the cause of the dark ages, ushering in years of misery for the average human being.
Most notably, the 1920’s stock market crash created the first modernly defined depression, marking the beginning of the pinning of the world economy on human opinion.
Financial markets have evolved since then, and for some reason someone decided that theoretical mathematics was the only element required in building and maintaining the world economy. Bear in mind that the concept of selling a product at a profit, pre-supposed actually having a product to sell.
Theoretical financial mathematics on the other hand gave traders the opportunity to trade in the same product more than once and sometimes at the same time through futures and options, creating a mathematical equation that balances on paper, yet opening a whole new can of worms in practice.
Without delving into the technical side of things in our current financial markets, the bottom line is that the earth relied on financial systems that was not backed by concrete products or assets, and needed daily new investment funds to be able to function.
This means that we have to keep on trading on these markets, for them to function correctly...or at all for that matter.
In theory, we could never experience another recession or depression if all the markets kept running on the averages they have until now.
In practice, the real threat of the largest banks in the world to produce money at an ATM was the result of markets built around nothing more than toxic debt in the U.S housing market. The ripple effect of this was felt throughout the world, and literally brought the international property market to its knees.
So...what’s the point then?
Well, simply put...I fail to see any real difference between pyramid investment schemes such as KRION and Madoff, and the broader picture financial markets of today, with the only difference being an effort made by large banks to base a sound investment on nothing more than other peoples debt.
They thus take the risks with your money, and split the profits...when they do appear, but send a letter of regret when the losses force you to lose your investment position.
All win for the banks or traders then, with little to no risk of loss. Finding investors is as simple as promising massive returns, as some futures are geared at a ratio of 10. That means that you can make up to 10 times the money you invested initially, normally in a very short term.
Due to deregulation in the financial markets, traders and banks are safeguarded against liability if your money is lost in highly questionable investment funds, where the operators of Ponzi schemes on the other hand need to be more careful, so as not to get caught out.
In that sense, especially in the early stages of the scheme, you are normally better protected with the illegal schemes, than with the legal ones, because you will most certainly make money, because they need to build up credibility!
On the basis that the concepts of something for nothing, minimal investment for maximum returns and ‘making-your-money-work-so-you-don’t-have-to’ is ineffective, and sometimes illegal, isn’t it shocking to note that not much has changed since we were faced with the single biggest economic crisis of the past 90 years in 2008?
The fact that someone like Berny Madoff, whom was regarded as a giant in the financial world, and formed part of one of the largest markets in the world ran a Ponzi scheme, just underlines the fact that he himself didn’t see much difference in the two.
The only difference is a trade at the toss of a dice, and a scheme that at least made copious amounts of money for its victims...er...investors for around 30 years!
World markets haven’t changed. They cannot change, as they are in too deep. It all functions around investor opinions, on futures and options that are based on property prices that never truly existed.
It’s a house of cards that could tumble at any moment, because there is nothing real backing the billions in the markets... pretty much the same as the billions invested in all the undiscovered Ponzi schemes in the world. Take your pick, I’d say you’re screwed investing either way...
Might as well sell it all, and open a beach bar if you ask me.
Mozambique will do... Mozambique will do just fine.
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