Ponzi+Scheme

Ponzi Scheme

What Is a Ponzi Scheme?
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﻿The Ponzi scheme is a system that never generates real profit but rather bounces money from investor to investor. The schemer entices investors by offering higher than usual returns, and ones that are abnormally consistent. As this happens, the investor wants to put more and more money into it. In reality this money is just feeding the other investors.

The scheme is designed to fail because in order to keep getting money, the earnings will be less than the money paid back to the investors. The authorities usually get involved before the scheme collapses on its own. It is easily detectable because the promoter is selling unregistered securities or just because someone suspects it due to the unusually high returns and consistency.

Knowingly entering a Ponzi scheme, even at the last round of the scheme, can be [|rational] economically if there is a reasonable expectation that government or other wealthy people will [|bail out] those participating in the Ponzi scheme.

=Ponzi Scheme Explained=

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