Is Global Finance a Ponzi Scheme? Ask a Russian Expert ... What's the difference between today's global finance system and a Ponzi scheme? This is the question that a 56-year-old veteran Russian financial scammer has been asking his victims. Chillingly, he almost has a point ... Sergei Mavrodi is one of the most infamous names in Russia's recent history. Back in February 1994, amid the turmoil of the country's transition to a market economy, the mathematician organized a Ponzi scheme called MMM ... Now he's back with an even more audacious endeavor: the honest scam. Last year, he announced the new project, MMM-2011, by stating boldly that it would be another Ponzi scheme. "Even if you strictly follow all instructions, you can still lose," he wrote on a website describing the project. "Your 'winnings' may be withheld without any explanation or reason whatsoever." – Bloomberg
Dominant Social Theme: This Mavrodi is an interesting fellow. He wrote, "What is money? ... Nothing! Nihil. A phantom. ... It is backed by nothing at all and printed by the masters in any quantity, at will."
Free-Market Analysis: Mavrodi ended up in prison, but when he came out, he started a series of "legal" Ponzi Schemes. They were legal because he admitted to them up front. People invested in them at their own risk. And when they collapsed, people couldn't claim they'd been tricked. His schemes did collapse but presumably they left him a wealthy man – legally.
What is true about Mavrodi's insights is that fiat money is indeed a Ponzi scheme. When fiat money collapses, as it does, inevitably, central banks print more of it. People lose the value of their investments via inflation and currency debasement. Often, they don't understand fully the value of what they have lost.
Most money in the world is created by quasi public/private central banks. These central banks use governments to create the credibility they need. Government is an integral part of the scheme.
Central banks are actually controlled by a global elite, apparently – a handful of dynastic families that are trying to build world government. This group and its enablers and associates seem to be actively involved in taking down the world's economies one by one.
The idea is perhaps to create an engineered depression that will make people malleable ... so they will accept world government and its accoutrements including one currency, one central bank, etc.
The Internet has been instrumental in unraveling the conspiracy to build one-world government but it has helped confuse the conversation about money. Even today, many people believe that if the current private/public fiat monopoly system were made entirely public, money would be rationalized and become an honest servant.
But giving government officials the ability to print money at will is surely not a good idea. Government bureaucrats will certainly debase the currency even more quickly than it is now being debased by a combination of public and private forces.
Some have maintained that interest is a primary issue when it comes to money systems. But in a market-based environment, people are surely free to offer money at interest, even compound interest. It is up to the borrower to make a determination as to what terms he will acquire. Some terms would be more onerous than others.
There is more. From this same strand of strangeness comes perfervid attacks on "Austrians" and free-market economics. Congressman Ron Paul, especially, is held up as an example of a nefarious creature who is actually fully in cahoots with Money Power.
It seems to some degree the grafting of Germany's national socialist program onto the modern-era American conversation What was once tried in National Socialist Germany by the powers-that-be is being re-tried in the US – likely with the same intention.
Money Power is always mercantilistic. Thus it wants and needs government through which it can work. Money Power always repeats its arguments. Somehow we are to believe that public bureaucrats can do a better job of printing money than the private sector. And if printing isn't an issue then distribution is. One way or another government is involved. Here's some more from the article:
The operation employed a structure borrowed from multi-level marketing. Early investors recruited new ones. A member who brought ten people into the fold could become a foreman and take a small cut from each investment by his “clients.” The first adopters could end up running an army of 100,000 or even a million. They offered returns from 20 percent for a one- month deposit up to 60 percent monthly for a 12-month deposit.
This time around, the mathematician was careful to mitigate the risk that he would be accused of fraud, or of operating a financial business without a license. MMM-2011 was not a legal entity. Money was moved strictly between people's private bank accounts or electronic wallets. The network made extensive use of communication technology: Potential foremen were interviewed via Skype, and each member was required to use a Gmail account.
Authorities were nonplussed. “The law enforcement agencies have a very high sensitivity threshold,” Russia's financial ombudsman Pavel Medvedev told TVRain. “They worry when someone gets killed, not when fraud is being perpetrated.” Criminal proceedings were started against Mavrodi in Novosibirsk, where he was accused of “aiding illegal enterprise,” but no move was made to arrest the MMM mastermind, who communicated with his followers only by posting videos on his website ...
MMM-2011 halted payments on May 31. “Unfortunately, I have to admit that a panic has started within the System,” Mavrodi wrote, blaming the media for spreading malicious rumors. “This is a pyramid! If everyone rushes to withdraw the money, there is no way there will be enough money for everybody. In fact, it would be the same with any bank.”
Indeed, the moral would seem to be that modern finance has much in common with Mavrodi's (legal) Ponzi scheme. Those who participate in today's economic environment do so with assurances from certified "experts" that the current system of Western finance constitutes the best of all worlds.
In fact, all monopoly money printing is a price fix, and price fixing never works. It always constitutes a wealth transfer, providing funds to those who have not earned the money to begin with and will utilize it less efficiently.
Because of ongoing economic difficulties, other forms of economic organization have begun to be examined, chief among Austrian, free-market economics and the idea of "honest money" in the form of gold and silver. While this has the weight of history to recommend it, other solutions have come to the fore as well.
The so-called Greenbacker movement (along with various brethren) has expanded radically in the past year. Gold and silver have actualiy come under attack, and have been decried as a "Jewish" instrumentality, while a private gold standard is criticized as a tool of Money Power.
But a PRIVATE gold standard is nothing more than agreement among parties to settle debts in gold. This has been done throughout history. Are those participating in the argument that historical (metals-based) money is bad and government-controlled fiat money is good are in some sense manipulative agents of Money Power? We know the Occupy Wall Street movement is manipulated. False Flags may surely appear in all guises.
Conclusion: Those who don't understand history may well be doomed to repeat it.