{"id":5888,"date":"2021-10-01T21:14:22","date_gmt":"2021-10-01T15:44:22","guid":{"rendered":"https:\/\/sketharaman.com\/blog\/?page_id=5888"},"modified":"2021-10-01T21:14:22","modified_gmt":"2021-10-01T15:44:22","slug":"why-would-anyone-run-a-ponzi-scheme-https-qr-ae-pgjcyu","status":"publish","type":"page","link":"https:\/\/sketharaman.com\/blog\/archive-my-content-amc360\/why-would-anyone-run-a-ponzi-scheme-https-qr-ae-pgjcyu\/","title":{"rendered":"Why would anyone run a Ponzi scheme? https:\/\/qr.ae\/pGJCyu"},"content":{"rendered":"

Why would anyone run a Ponzi scheme since they can’t keep recruiting new investors forever so isn’t it inevitable that they get caught?<\/strong>*<\/p>\n

So many criminals get apprehended, still new crimes keep happening.<\/p>\n

\u201cIn the long term, we\u2019re all dead anyway\u201d, said the famous economist John Maynard Keynes. Obviously, that doesn\u2019t mean we don\u2019t begin to live or live as long as we do.<\/p>\n

I have never run a Ponzi Scheme. Nor do I know anyone who runs anything that, AFAIK, is a Ponzi Scheme. I have never invested in anything that, AFAIK, is a Ponzi Scheme.<\/p>\n

I\u2019m not a Criminologist but I\u2019ve read enough crime novels and watched enough crime TV shows to tend to believe that criminals don\u2019t always think like normal people.<\/p>\n

With that preamble, I can think of many reasons why someone would run a Ponzi Scheme despite the obvious shortcomings with them, as pointed out in the original question.<\/p>\n

    \n
  1. They take the \u201cNo Risk, No Gain\u201d maxim to the extreme.<\/li>\n
  2. They believe that they\u2019re smarter than others and can continue to find and hoodwink gullible investors indefinitely.<\/li>\n
  3. They believe that, even if their scheme stops working one day, they can abscond with enough money.<\/li>\n
  4. They think they have the ability to project to\u00a0all their investors\u00a0that they are the\u00a0first third of the investors\u00a0in the scheme. Like all financial investment products, timing is important in a Ponzi Scheme. According to a study, investors who got in \u201cat the mezzanine\u201d – first third – into Ponzi Schemes got great returns.<\/li>\n<\/ol>\n

    Like bubbles, all Ponzi Schemes blow up eventually. But the operating term is \u201ceventually\u201d – it\u2019s not measured in days or months but often in years. And, on the way up, enough people make enough money out of them. That\u2019s why, no matter how many bubbles burst or Ponzi Schemes blow up, new ones will always keep cropping up – unless regulators find a way to stop them forever.<\/p>\n

    DISCLAIMER: This is neither financial nor legal advice.<\/p>\n

    *: This is the original question I answered. I\u2019m repeating it to help me make sense of my answer in case it\u2019s moved to \/ merged with some other question that I didn\u2019t answer.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Why would anyone run a Ponzi scheme since they can’t keep recruiting new investors forever so isn’t it inevitable that they get caught?* So many criminals get apprehended, still new…<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":3722,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-5888","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/pages\/5888","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/comments?post=5888"}],"version-history":[{"count":1,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/pages\/5888\/revisions"}],"predecessor-version":[{"id":5889,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/pages\/5888\/revisions\/5889"}],"up":[{"embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/pages\/3722"}],"wp:attachment":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/media?parent=5888"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}