Mailbox: Hands off our schemes, say users

Cape Town - As the National Consumer Commission (NCC) conducts its investigation into nine suspected pyramid schemes, two Fin24 users have come out in defence of the investment option.

The probe into the nine schemes - WorldVentures; KIPI, also known as Mydeposit241; Make Believe; NMT Investments; Instant Wealth Club; MMM South Africa; DIPESA; Sikhese (Pty) Ltd and Wealth Creation Club - was prompted by several complaints received by the Financial Services Board (FSB) and the South African Reserve Bank (Sarb) about the operations of the schemes concerned, NCC spokesperson Trevor Hattingh told Fin24.

A Fin24 user who calls himself Highguru is sceptical on why the government is against such schemes and has defended his investment.

He writes: I would like to first state that I am invested in the scheme (sic); do I trust that the scheme will give me back money as promised? Yes, because I know of people who have received their money.

The question one should ask is why is government against such schemes...

The answer lies within the financial system we live in. Banks by nature are Ponzi schemes...

You deposit money and they compound/leverage that money 10-15 times on a single deposit from thin air.

Now, it is said that if you want to see if something is a Ponzi, the test is if participants want their money all at once - not all of them would receive it, yes this is true.

But the same accounts for banks. If we all went to collect our deposits, some of us would not receive the deposits.

But why do we put money in banks other than to comply legally?

We trust that when we want our money we will receive it. The model of these schemes represent that of a stokvel - money changes hands between participants and its called a "donation".

As far as I am aware there is no law that prohibits donations, except that you must pay a tax if you donate more than R100 000.

There is no law saying I cannot lend my friend money and he in turn lends to someone else, and the day I need help they give it back to me with some interest.

It is merely a system of circulating money for which the government has no hands in the pie.

This scheme will  not fall as long as people keep exchanging money just like a bank will not fall as long as people keep depositing - imagine if people stop putting money in the banks? They too will collapse.  

The thing about these schemes that government does not like is that they feel they cannot regulate what happens. It disrupts the banks' reserve margins and of course it hampers interest revenue in banks as people will not be taking loans from them but rather paying in cash which then simply leaves the bank as an intermediary or just storage - it is a systematic risk to the financial system.

The moral question is why should people be barred from determining their own destiny?

Another Fin24 user has likened a typical "Ponzi scheme" to a stokvel, saying there's nothing to complain about.

I happen to know a lot of people, never have I heard them complain about it. I am planning to join myself, this is a stokvel.

I do not get why people complain about these stokvels - can’t they see that this is just helping one another?

If I get the money this month for example, next month will be the other person getting it. Not only from me, from other members. Hence it is called a “community thing”.

Why is it such an issue, because no one has ever complained about them?

The only people who are complaining are those that are not the members of KIPI or any “stokvel”. Stokvels are held at the locations (communities), not once did the government investigate them.

Now that it is growing, the government wants to investigate. Why?

There are people out there who need to be seriously investigated, yet they waste their time investigating harmless KIPI.

For Pete's sake, we are living in a poor country where we get jobs that are not satisfactory, and tax playing its role…we also need to be like them - people who are wealthy and investigating KIPI.

This is not a 'get-rich-fast-scheme' as they say it is, you wait for your turn. Everybody waits their turn.

How then is it a 'get-rich-fast-scheme'?

READ: Mailbox: Resisting too-good-to-be-true offers

Disclaimer: All letters and comments published in MyFin24 have been independently written by members of the Fin24 community. The views are therefore their own and do not necessarily represent those of Fin24.

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