What's the Good Word - Ponzi Scheme ?

 I came across a new word “Ponzi Scheme”.  I decided to find out. Here is what it I found..…

 A Ponzi scheme is an investment scam that pays existing investors out of money invested by new investors, giving the appearance of earnings and profits where there are none.  After some time, the fraudster disappears leaving the investors high and dry. Not all such schemes are easy to detect.

This is named after Carlo Ponzi in the US in 1920s. He was an Italian immigrant to the Unites States. At that time there was a practice that whenever someone sent a mail overseas, they would also buy international reply coupons that facilitated reply from the recipient. Ponzi would buy reply coupons in a different country where they tended to be cheap and then sell them in the US. The difference in the price was the profit made. He started off saying the investors would get 50% return in 90 days.  It didn’t turn out as easy as he thought. There were far more costs involved in conducting business overseas and dispatch of the coupons. The costs soared high and Ponzi kept the bad news to himself. More and more investors poured in handing him all their life’s savings. He paid off the initial investors with the new money that kept pouring in and pocketed some for him.  As the early investors could get real returns, there was no suspicion. In fact, it only generated a chain of investors flocking to him. No one complained.

Ponzi started living lavishly. He was not clever enough. People began to wonder how he bought and sold. Eventually, he was busted. But he was not the first (nor going to be the last) to carry out such a scam. Possibly, he stood out because of the money (millions) he made and the vast number of people swindled.

Here’s  Charles Ponzi  (in)famous quote !

"Even if they never got anything for it, it was cheap at that price. Without malice aforethought I had given them the best show that was ever staged in their territory since the landing of the Pilgrims! It was easily worth fifteen million bucks to watch me put the thing over."