A
Ponzi Scheme is when the money you pay to join gets paid to someone who is
already in the scheme. The promise is that you will then get paid by new
recruits. Normally a multiple of the amount you initially paid. It seems like
magic. Because it is. If you cut out the noise, you are effectively stealing
money from each person you recruit. But they then recruit others so it “cancels
out”. When new recruits run dry, and they will run dry, the last people to
enter are the final losers. So instead of stealing from your friend, you are stealing
from a friend of a friend of a friend of a friend. The layers make you feel
better. A Ponzi Scheme is wealth extraction. Typically from the vulnerable.
Perpetrated by well meaning believers. The way to spot a Ponzi Scheme is to
look at the Fundamentals. How is money being made? What real problem is being
solved? What real Win-Win wealth creation is going on? If you can’t answer that,
then it is Win-Lose wealth extraction. Then the “product” is other people’s
money.
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