sexta-feira, novembro 02, 2012

Government Ponzi schemes

Carlo Ponzi, Alias Uncle Sam por Gary North:
Carlo "Charles" Ponzi was a con man who was the Bernie Madoff of his era. For two years, 1918 to 1920, he sold an impossible dream: a scheme to earn investors 50% profit in 45 days. He paid off old investors with money generated from new investors. The scheme has been imitated every since.

Every Ponzi scheme involves five elements:
  • A promise of statistically impossible high returns
  • An investment story that makes no sense economically
  • Greedy investors who want something for nothing
  • A willing suspension of disbelief by investors
  • Investors' angry rejection of exposures by investigators
Strangely, most Ponzi schemes involve a sixth element: the unwillingness of the con man to quit and flee when he still can. Bernie Madoff is the supreme example. But Ponzi himself established the tradition. The scheme, once begun, moves toward its statistically inevitable end. From the day it is conceived, it is doomed. Yet even the con man who conceived it believes that he can make it work one more year, or month, or day. The scheme's designer is trapped by his own rhetoric. He becomes addicted to his own lies. He does not take the money and run. This leads me to a set of conclusions. Because all Ponzi schemes involve statistically impossible goals, widespread greed, suspension of disbelief, and resistance to public exposure,
  • All fractional reserve banking is a Ponzi scheme.
  • All central banking is a Ponzi scheme.
  • All government retirement programs are Ponzi schemes.
  • All government-funded medicine is a Ponzi scheme.
  • All empires are Ponzi schemes.
  • All Keynesian economics is a Ponzi scheme.
But there is a difference between a private Ponzi scheme and a government Ponzi scheme. The private scheme relies on deception and greed alone. A government Ponzi scheme relies on deception, greed, badges, and guns.

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