Money & WorkFact

The return comes from the next investor, not from a business.

In a Ponzi scheme, payouts come from new customers' deposits, not from earnings. As long as inflows beat outflows, everything looks solid. Since participant numbers would have to grow exponentially, collapse is built in – Bernard Madoff's scheme reached about 65 billion dollars.

Useful: Warning signs: suspiciously steady returns and pressure to reinvest payouts.

Source: de.wikipedia.org

BetrugGeschichte Risiko

Difficulty:

Related cards

How a rumour can kill a healthy bank.Because banks hold only a fraction of deposits as cash, a bank can become insolvent when many …
The only free lunch in investing.Diversification means spreading money across many assets that don't fall at the same time. If a …
Why '8% guaranteed' is always a lie.Return is the payment for bearing risk. Safe assets like savings accounts pay little because nobody …
Why the world counts in dollars: a hotel in New Hampshire, 1944.In July 1944, 44 nations at Bretton Woods agreed on a monetary system: the dollar was pegged to …
A steel box changed the world economy more than the internet.In 1956 trucking entrepreneur Malcom McLean loaded 58 containers onto a converted tanker. Before …
The euro was three years old before anyone could touch it.On 1 January 1999 the euro was introduced in eleven countries as book money: accounts, transfers …
1.95583 and 166.386: two numbers a whole generation knows by heart.The conversion rates to the euro were fixed irrevocably on 31 December 1998: 1 euro = 1.95583 …
In 1923 a loaf cost billions. More in the afternoon than the morning.In November 1923 one US dollar cost 4.2 trillion marks. Wages were paid daily because money lost …

Keep reading

This card belongs to the topic Money & Work. Every card is short, cites a source and can be saved – due ones come back by themselves later.

About Doomlearn · Projects · Legal notice · Privacy · Terms