Our Global Ponzi Scheme Seems to be Approaching Its End
Ponzi Scheme – A Made in Canada Debacle
Charles Ponzik 1920
Did you know that the Ponzi scheme had its genesis in Canada? Since this December is the 101st anniversary of the conviction of Charles Ponzi, its probably a good time to explore the Canadian side of the world’s most famous securities fraudster. In 1907, after some years of failing to do well in the U.S., Ponzi moved to Montreal, Quebec, Canada and became an assistant teller in the newly opened Banco Zarossi, a bank located on Saint Jacques Street started by Luigi “Louis” Zarossi to service the influx of Italian immigrants arriving in the city. By this time, Ponzi had a winning personality and spoke English, Italian, and French, which Zuckoff says helped him get the job at Banco Zarossi.[7]
It was at Banco Zarossi that Ponzi first saw the scheme of “robbing Peter to pay Paul” (which subsequently would be called a Ponzi scheme).[8] Zarossi paid 6% interest on bank deposits—double the going rate at the time—and was growing rapidly as a result. Ponzi eventually rose to bank manager. However, he found out that the bank was in serious financial trouble because of bad real estate loans, and that Zarossi was funding the interest payments not through profit on investments, but by using money deposited in newly opened accounts. The bank eventually failed and Zarossi fled to Mexico with a large portion of the bank’s money. Ponzi watched all this and thus after learning how to deceive people in Montreal he moved back to the US to try his luck. Ponzi promised investors a return of 50% in 90 days. When investors sought to cash out, Ponzi sweetened the deal to keep them on, promising them a 50% return in 45 days. Similar to the Montreal banking scam, he used money from new investors to pay out the old. The first few customers were paid back with the promised returns, to convince future investors that the scheme was legit. Ponzi was wildly successful luring in investors to give him money. By March 1920, people were lining-up down the street where his office was located, to drop off cash to invest. He was pulling in US$1 million per month. By June, 1920, he was pulling in US$1 million per week and was sitting on a fortune.But it was a scam.
Just like our current economic system is a scam. The new “suckers” are the 3rd world farm labourers and Indigenous tribes in the Amazon and Bangladesh shirt makers, etc. plus most importantly our world ecosystems that are being destroyed, along with the species that live there, to feed “the beast” of economic growth. There is no way for this to end, if it continues as is, except the way a Ponzi scheme ends: badly. In a Ponzi scheme the truth is revealed and the house of card collapses. Is there any evidence that what I am claiming is true? Well, other than looking around you and seeing the collapse of states and ecosystems and species and the accelerating divide between rich and poor…. Well if that is not enough evidence how about the words of a Nobel laureate:
The world economy is based on ever-increasing population, said Nobel laureate Steven Chu, a scheme that economists don’t talk about and that governments won’t face, a scheme that makes sustainability impossible and that is likely to eventually fail.
“The world needs a new model of how to generate a rising standard of living that’s not dependent on a pyramid scheme,” Chu said at the University of Chicago.
Chu didn’t specify what that new model would look like, but he offered a solution to the population growth the current one relies on. For example, healthy young workers pay the health care costs for aging workers and retirees, the former energy secretary said, a scheme that requires increasing numbers of young workers. And economic growth requires more and more people to buy more and more stuff, with dire environmental consequences. There are at least two problems with that:
- “Depending on a pyramid scheme or a Ponzi scheme, there’s no such thing as sustainability,” Chu said.
- As standards of living increase, population growth declines. So if the economy succeeds in raising standards of living, it undermines itself.
“The economists know this, but they don’t really talk about it in the open, and there’s no real discussion in government,” Chu said. “Every government says you have to have an increase in population, whether you do it through immigrants or the home population. So, this is a problem. “China has replaced its one-child policy with incentives for parents to have two children, Chu noted as an example, and France offers a prize, the Médaille de la Famille Française, to mothers of large families. Incentives like these will not help the world achieve sustainability, he said.Chu, the man who solved the Gulf Oil spill with a doodle on a napkin, then offered two painless solutions to population growth: “Education of women and wealth creation. Across all cultures. You go negative. You go negative birth.”In many countries around the world, developed countries, Japan, Spain Italy, we’re talking about 1.3 (children per couple), 1.2 going below 1, where 2 is steady state.”So Chu expects these effects of rising living standards to eventually offset the growth of human population. That will help the environment, he said, but it will also require a new kind of economy. [from Forbes]
There are many people saying the same thing. I think you will find these two videos validate the above point of view.
Our problem is that we are so “stuck” in our exponential growth, capitalism model that the forces required to change our social structure are bound to be painful. Think of what just happened in poor Sri Lanka. They tried to go organic for all their agriculture without any preparation or training of the farmers. The production of rice, tea, etc. collapses and contributed to their current economic collapse.
There’s no singular cause for the crisis, which had been building for years due to political corruption and right-wing authoritarian politics that weakened democracy. In April 2019, the crisis accelerated after suicide bombings at churches hurt the island nation’s critical tourism industry, which weakened its currency and made it more difficult for the government to import essential goods. At the end of 2019, tax cuts slashed government revenue, while in 2020 the Covid-19 pandemic further decimated the tourism industry, with skyrocketing inflation pouring more fuel on the fire. Pandemic aside, that’s not an atypical set of conditions for the collapse of a developing country like Sri Lanka. But in the spring of 2021, President Rajapaksa made an unusual decision: He banned synthetic fertilizer and pesticide imports practically overnight, forcing Sri Lanka’s millions of farmers to go organic. It proved disastrous, as a group of Sri Lankan scientists and agriculture experts had warned.[ From vox]
So what are you and I to do? Stop participating in the global Ponzi scheme. Consciously make choices in what you do or buy that are sustainable. We know that that means, we just have to do it. Good luck making what will seem like hard choices but will improve your quality of life once you are over the hump of change.
References
https://www.antimoneylaunderinglaw.com/2021/10/the-ponzi-scheme-has-canadian-roots-who-knew.html
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