How A Ponzi Scheme Works

Uploaded by epipheo on 02.05.2012

So you may have heard about Ponzi schemes in the news. Everybody knows they're illegal
but you might not understand how they work. So Ben is here to show us. To start off Ben
gets a few people to invest their money with him. At the end of the year he gives those
clients amazing returns that beats every other investor in the market. Needless to say the
investors are thrilled. In fact they're so ecstatic about all the money they're making
that they tell all their friends and family about it too, who tell their friends, who
tell their friends. In the stock market most investors make money some years and lose money
others. But Ben's Ponzi scheme, yeah it never loses money. In fact it always beats the market
by a huge margin. But the returns he pays to these people aren't from actual profits.
He just takes the money these new guys invest and gives it to these guys. But as soon as
you can't get enough new money from this group to pay these people then the whole pyramid
starts to crumble because they're not getting paid anymore. Ben, and these guys who invested
first, made a killing but these folks lost all their money. So the next time a guy like
Ben tries to get you to invest in something that sounds too good to be true, it probably
is. Just ask Ben.