Let’s say there’s a new pyramid scheme hitting town and J.Q. Citizen is itching to join the immensely profitable fun. But dang it, he doesn’t have any money to speculate with. If only somebody would loan him some capital to play with…
A pyramid scheme, also known as a Ponzi Scheme after “financial innovator” Charles Ponzi, exploits the “something for nothing” greed inherent in human nature. A handful of speculators are persuaded to invest some capital, which is then distributed to a larger circle of new speculators as “profit.” The “pyramid” of enticing new investors by distributing the previous speculators’ money as tremendous “profits” continues ever higher until the pool of new speculators is exhausted.
At that point the pyramid collapses and the last “layer” of speculators–the latest and largest–discovers their “investment” is worthless, as the pool of “greater fools” has been drained. read on >>>
**When Pyramid Schemes–a.k.a. Housing–Go Bad **