Divining the News (DTN)

Not Mainstream News

Pyramid financial schemes. Can they be kosher?

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Having just worked in a public place, I was surprised at the amount of people involved in a pyramid financial system:

It is not for me, but it is worth looking at.

The bottom line is: for an investment of 200, it is possible to make 40,000. One has to invest 200 and find two more new recruits, that is all. It seems people have been doing this for years, so there are success stories, and credibility.

The schemes are labeled as a ‘circle’ and therefore the followers make it clear they are not the same as the illegal pyramid schemes.

To my mind it is the same thing.

Columbia has been in the news for the last couple of weeks regarding the collapse of such schemes, and many years ago Albania also experienced a lot of social upheaval related to a pyramid scheme.

BBC News

Pyramid schemes can offer dramatically high returns by using later investors’ cash to pay off those who invest first. But they collapse when the flow of …

Seattle Times – 283 related articles »

Albania pyramid scheme fugitive arrested – International Herald …

24 Sep 2008 … TIRANA, Albania: Albanian police say a fugitive who ran a failed pyramid investment scheme has been arrested in Uruguay. The collapse of …
http://www.iht.com/articles/ap/2008/09/24/europe/EU-Albania-Pyramid-Scheme.php – 62k – CachedSimilar pages

It seems a way of playing a financial game outside of legal or Government interference or tax.

And the morality seems (to me) no different from banks and subprime etc. Presumably the entire financial system is going kaput, those in pyramids or in the banks.

Well what could be the drawbacks to such systems?

1/ Any member is inclined to want to invite anybody they meet (or know) into the system (circle). So we are left to see each other as profit potential.

2/ If indeed they are illegal, then the authorities presumably have the right to eavesdrop on members activities.

As far as I know, the schemes operate in the open, with regular meetings. And given an ever increasing population, it seems mathematically possible to profit forever.

Most certainly people brag about living off of the profits. And everyone I met seemed articulate, intelligent and not immoral.

Here is a quote from a large investigative and

VERY negative article on pyramid selling:

Pyramid schemes focus on the exchange of money and recruitment. At the heart of each pyramid scheme there is typically a representation that new participants can recoup their original investments by inducing two or more prospects to make the same investment.

For each person you bring in you are promised future monetary rewards or bonuses based on your advancement up the structure. Over time, the hierarchy of participants resembles a pyramid as newer, larger layers of participants join the established structure at the bottom.

They say you will have to do “little or no work because the people below you will”. You should be aware that the actual business of sales and supervision is hard work. So if everyone is doing little or no work, how successful can a venture be? Source

The following picture is based on each person recruiting 9 new participants. Where as most pyramid schemes are based on recruiting two new participants.

There is some kind of parallel between a pyramid financial system and the reality of our heirarchical power structures. Is a central bank or an insurance company any different? It seems all financial concerns (particularly capitalistic) are dependent on expanding markets, that is: new recruits.

So, no surprise then that our authorities won’t approve the competition.

Most (but not all) religions encourage new recruits.
And secret societies might not depend on new investors, but certainly new recruits push the longer established people further up the ladder.

Written by morris

November 23, 2008 at 10:53 pm

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