A Hot Chick Explains How a Ponzi Scheme Works Hot For Words Bernard Bernie Madoff

How a Ponzi Scheme Works Charles Ponzi Scam Like many, I am following the Madoff scandal. After reading about it for a few days, I realized that I didn’t really know how a Ponzi scheme works, so here’s the meat of it from Wikipedia. I am just shocked, dismayed, and amazed at the caliber of victims involved here. Madoff? Just a brilliant con-artist trafficking in the allure and mystique of investment esoterica. There’s got to be some explanation about the psychology of the “elite club” where Faith trumps Skepticism on such a large scale. The story is not in the crime itself. The story is in the mechanisms underlying Trust (and how Madoff came across as so trustworthy). On a related note, Robert Reich on the pendulum swings of public trust. Suppose an advertisement is placed promising extraordinary returns on an investment for example 20% for a 30 day contract. The precise mechanism for this incredible return can be attributed to anything that sounds good but is not specific: “global currency arbitrage”, “hedge futures trading”, “high-yield investment programs”, “offshore investment”, or something similar. With no proven track record for the investors, only a few investors are tempted, usually for smaller sums. Sure enough, 30 days later the investor receives the original capital plus the 20% return. At this point, the investor will have more incentive to put in additional money and, as word begins to spread, other investors grab the “opportunity” to participate. More and …