A little bit of economics every day-Ponzi scheme

The Ponzi scheme originated from an Italian named Charles Ponzi, who immigrated to the United States in 1903. Ponzi had been imprisoned several times before for forgery and human smuggling crimes. He was a man with a bad record.

But after more than ten years of American-style dream of getting rich, Ponzi discovered the fastest way to make money-finance. Therefore, starting in 1919, Ponzi hid his history and came to Boston, designed an investment plan, and sold it to the American public.

The investment plan is very simple, which is to invest in something and get high returns. The difference is that Ponzi deliberately designed the plan to be very complicated, so that ordinary people can't figure out the specific content.

Just after the First World War, the world economic system was in chaos. Ponzi took advantage of the chaos to sell a European postal note to the American public, claiming that investors could receive 50% of their investment within 45 days. % high returns.

In order to increase credibility, Ponzi also showed evidence to the public: the first batch of investors did get the promised returns, so in just about a year, almost 40,000 Boston citizens , became an investor in Ponzi's money-making plan, and Ponzi made a total of US$15 million.

Until August 1920, Ponzi went bankrupt. Since then, Ponzi scheme has become a proper term, which means using the money of the later "investors" to reward the previous "investors".