Bernie is right, Governments are large Ponzi schemes. This is how the government works : Governments borrows new money to retire old debts.So long as there will be people willing enough to lend the government money this scheme will continue rolling. But if creditors pull the plug, governments go bankrupt. It has happened before in Argentina and other South American countries.

In a Ponzi scheme Early investors are paid out of money put in by later investors and when there are no new investors, the Ponzi scheme collapses.

A detailed explanation as to how US Government is a large Ponzi Scheme is at Seeking Alpha website.

I think during his case with the government Bernie Madoff should have declared to the court that his “investment” scheme was modeled directly after Social Security.

Read the whole interview at NY Magazine

Bernie Madoff NY Magazine Interview is a post from: Daily Investment Tips

He has termed the move by Federal Reserve bank a giant ponzi scheme. Yes, the entire federal money system is a Ponzi scheme, but this isn’t news. This system has been in place for about 100 years.

The Future of Bond Market Prices and Interest Rates

The actions of the Fed, led by Chairman Ben Bernanke, will “likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment,” he wrote in a commentary posted on Pimco’s website Wednesday. See Gross’s full commentary.

Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme,” he said.

The End Game

Such a plan “raises bond prices to create the illusion of high annual returns, but ultimately it reaches a dead-end where those prices can no longer go up,” Gross wrote. “Having arrived at its destination, the market then offers near 0% returns and a picking of the creditor’s pocket via inflation and negative real interest rates.”

Bill Gross : Bond Prices & Rates Forecast. is a post from: Daily Investment Tips

This cartoon tells it all

Investing School : Bernard Maddof Investing School is a post from: Daily Investment Tips