Tuesday, December 1, 2009

Ponzi Schemes

When I was growing up I was labeled "Class Clown" in school.

I loved to make people laugh, often at my own expense. School was boring, learning was a chore and if given the choice I would much rather play outdoors than sit in a classroom. I LIVED for RECESS!

That's changed, LEARNING is a passion now.

When I was about 19 years old I became the victim of a Pyramid Scheme. One of the guitar players in my band told me about this really great opportunity that he had just joined. He was excited and said I could make lots of money if I came and checked this out.

When I arrived there were about 30 people there. These four guys, in their early 20's, dressed in really nice suits were flashing wads of cash around.

All we had to do was get two people to send $35.00 to the people on the list and our names would get on the next generation of the list. Then the people we recruited had to get two people each and so on.

WOW! That's simple. I could see the dollar signs flashing across my brain like Neon Lights!

Today, my analytical mind would immediatly see that this is completely bogus based simply on the powers of 2 which, when you get a Degree in Computer Science, is where you spend lots of time - in that Binary World.

Even if only ONE person in the world initiated a Pyramid Scheme and everyone participated each person actually getting two people to sign up and they in turn get two more people ... by level 28 with all of the people added up you exceed the population of the USA by 200 million.by level 33 you have exceeded the population of the Earth by 2 billion.

Some people, the individuals that START these pyramids actually can make a few bucks. Most people are aware of the scheme and even on a perfect day so to speak you will not get 100% of the people buying into the deal.

What happens to the people who join down line? They have less options because they are starting their pyramid at someone else's level 6 (as in the diagram below) or level 20. As you travel down the levels there are fewer people who are not part of the scheme.

Why these schemes work is that new people (suckers) are born every day and many of these people are as gullible as I was.

This is why education is so important!

What's even worse is when the schemes have more than 2 people to recruit, I have seen numbers like 6 and 12. Many of these multi-level marketing schemes that require a "Down Line" and such are fancy wrappers for the classic Pyramid Scheme. These new deals often sell a product like Vitamins or Juice and you get percentages.

Analyze what the whole concept is and above all do not use your emotions or greed to blind you to the real deal.

Be cautious if you hear words like Down line. Down lines are not all bad, people have made money in Amway, but again, it's where you are on the pyramid and the people below you that will affect your success. That being said run like a Gazelle being chased by a Lion if you hear the words "all you have to do is invest this amount of cash and then recruit or get 2 or more people to sign up"

Have a great day!

No comments:

Post a Comment