A
Ponzi Scheme lures new investors and pays (/redirects) profits (/new money) to
early investors with funds from recent investors. Until the music stops. Then
someone is left without a chair. Nothing is created. There is no substance. It
is simply a redistribution. Normally Ponzi Schemes are dressed up in such a way
that many (even most) of the true believers don’t know they are being taken
advantage of, or are setting the scene to hurt someone else. Ponzi Schemes rely
on the illusion of sustainability. To avoid them, you need to look at the
fundamentals of what is going on. To ask the question, how does this end? To do
Due Diligence. Ponzi Schemes normally require an initial investment, and then
promise above average returns. In most cases, “too good to be true” is a good
sign that it is not true. Real wealth creation is normally not outside the box.
It is real problems being solved. Then reinvestment in new real problems being
solved. Sustainable growth plus time.
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