Inconvenient Truth: Why half of the World is an Unintentional Scam or Ponzi Scheme
Do you think investing in the fund or stock is the scam?
What about buying the insurance, investing in the new housing project and the start up?
Yes and no depending on the definition.
Familiar story
People on the top get super rich and when the scheme need to give money back to the people the scheme collapse.
Unfortunately, this is an inherent part of our society.
The longer they run, the lesser they are recognized as a scam.
Now we will explain how even the good people with good intention unintentionally turn into the scam.
An Inevitable Success Path: An Unintentional Scam
Let’s see the “How Startup Funding Works”, isn’t it look like the Ponzi Scheme.
When you need money, you need a story
You might have the product or achievement but it is a different scale to what you are selling.
Product worth ‘X’, you say it will make ‘10X’ return and your company is going to have ‘100X’ valuation.
If you say it is slow and will not be big, who will fund you?
It can be anything from traditional one like real estate to start up or crypto. Anything that is fancy and can trick the people.
Why this always work
The Rich: We are Never Stupid but Greedy
If you need to give me 1,000$ to buy my company share, no one will buy that.
But what if you give me 1,000$, and in a year you can make 5,000$ and buy the nice car.
This tricks your brain to ignore the fact, being greed and start chasing the more money they promise.
That is why appearance of being successful like nice car, big house or wearing a nice suit or anything that remind us of being rich like nice office, luxury vacation, tall building, some fancy tech, rich people, celebrities, politicians is the essential part of every scam.
The Poor: Exploit on our Little Hope
In every scam exposed, it is surprise that good portion of low-income people put the money into it.
Why? We all hope that one day our life will be better.
Got a nice car and a big house. We want to be like them.
Despite how ridiculous the story is, we have some hope in the bottom of our hearth that if we give it a try, ordinary people like us can be like them.
And … they are convincing us so.
Facing the Fact: Real Progress is Slow and Uncertain
Months and year pass. Cash burnt.
Everything is not going the way it should. This is very normal. Failure is normal. But now you have got a problem.
Now you got other people money with no progress.
But now you need more money to survive.
So you start to invent some more fancy story and vision. Promise more.
Now you are diverge from the reality and become a true scam.
How to Keep Going: Small Illusion of Success
To make this more real, you need to give some proof of what you are saying.
This is why the 15%-return Ponzi Scheme give you back the dividend or allow someone to withdraw the money.
This is why business guru course or the MBA make the exclusive party that everyone is wearing a suit. It tricks you into the feeling that you are successful when you are not.
This is why the startup show you the prototype to confirm your investment is working.
This is why house price is always going up.
Keep Going to Get the Shit Out
Some people genuinely believe in the scheme because the nice props, nice story, media covers and some illusion of progress
On the other side, some find out the truth.
Now you have investor on your side. They realize that they are buying the air. They will either lose the money or scam other people to buy this shit.
The only way to getting the money back is selling this shit to the other.
Why don’t give it a try? Now they lose everything, nothing more to lose.
The Good Exit: The Longer It Get, the Lesser it Looks Like a Scam.
Once the start up enter the stock market, it clear up all their sins of unintentional scamming the people.
People got familiar with the scam enough not to recognize it as a scam.
It is now part of our life. Now continue making up more story, the price swing and make the capital gain.
The Bad Exit: The Money that Never Goes back
The explosion
A good amount of people start to find out and exposing the fact. Now the scheme collapse quickly and all money is lost.
Work just like bank run and a market crash.
The Zombie
No more activities. No more money. No more story and it is quietly burial ground for all of the money you put into it.
Conclusion: How to live with this
Now you might realize that a lot of stuff around us is the scam.
Real business is slow and boring.
George Soros saying: “[Former Citi Bank CEO] Chuck Prince famously said we have to dance until the music stops. Actually the music had stopped already when he said that.”
Something to add here is you better enjoy and leave the party well before the music stop and the police raid.
Cheers!