The Great Depression Online

Great Depression Online Archive Issue:

Charles Ponzi and The Ponzi Scheme

Day 4 of 7 - Seven Day Course

Inside Day 4 You Will Discover…

*** How Charles Ponzi Ended Up in the Pokie
*** How the Federal Reserve Encourages Inflation Through Ponzi Finance
*** Bread Inflation of 825.67 Percent
*** Why the Federal Reserve Must Inflate
*** And More!

Charles Ponzi and The Ponzi Scheme

Charles Ponzi gained notoriety in 1920 when he hatched a ploy offering 50 percent return on investment in 45 days, or a 100 percent return in 90 days.

Unknown to investors, the returns were paid by the money of subsequent investors.

When incoming money could not keep up with payment of returns, the show was over.  But not before over 17 thousand people had been taken for over $10 million.

Ponzi was sentenced to the pokie.


Mug Shot of the Notorious Swindler, Mr. Charles Ponzi

After serving time in federal prison Ponzi was released to face state charges.  He jumped bail and fled to Florida and set up a scam to sell Florida property. 

Authorities soon caught on to the scam, so Ponzi shaved his head, grew a mustache, and tried to flee the country as a crewman on a merchant ship.

He was caught and sent back to Massachusetts to serve out his prison term.

Why should you care about this little yarn?

The Federal Reserve And Ponzi Finance

Would the Federal Reserve really encourage a Ponzi scheme?

In actuality, they already have.

They have created a Ponzi finance of sorts that encourages perpetual inflation.

The very fact that the dollar has lost 95 percent of its value under their management confirms this.  Yet, up until now, inflation has been somewhat contained; its occurrence has been gradual.

Did you know that in 1971, the year gold's backing of the dollar was removed, you could get three 20-ounce loafs of bread for $0.89?

Today one 24-ounce loaf of bread costs $3.29.  That's an 825.67 percent price increase on a per ounce basis!

In 2007, the United States, if not already, is nearly bankrupt.  To review, let us again return to Federal Reserve Chairman, Ben Bernanke:

"Spending on entitlement programs will begin to climb quickly during the next decade.

"The outcomes that appear most likely...involve rising budget deficits and increases in the amount of federal debt outstanding to unprecedented levels.

"A vicious cycle may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits."

In short, the United States will never be able to pay off the debt it has taken on in today's dollars.  It could either back out of the entitlement programs it has promised or, to prevent bankruptcy and financial collapse, it could inflate the money supply.

In this scenario the debt would be repaid, but in dollars of a much lesser value.  Social Security, and other entitlement program, payments would still be made but the dollars would not go as far.

It's a dangerous game they'll play.  And one that could very quickly get out of hand.

For example...

What if that $3.29 24-ounce loaf of bread skyrocketed overnight another 825.67 percent to $30.45?

What if the dollar again lost 95 percent of its value, but this time it happened in just one year?

What if you found that you had just as much money in your bank account as you have now, but it was only worth 5 percent of what you thought it was? 

In effect, overnight, you were 95 percent poorer.


M.N. Gordon
Great Depression Online

P.S.  Find out if this could really happen in tomorrows edition -- Day 5 of 7 – of the Great Depression Online.


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