To the Editor:
Bernie Made-off (Mr. Ponzi Scheme) probably didn’t have a property in Goffstown. Perhaps he had one in elsewhere
in NH – who knows for sure. He went to jail with no trial or discovery motions. That doesn’t mean that
Goffstown residents were immune from the impact of Ponzi schemes however.
The Financial Resources Management Company (FRM) in Meredith, NH was also alleged to be running a Ponzi scheme.
The fact that the NH Governor, Attorney General and Banking Commission failed to respond to resident complaints
about FRM is another story. Perhaps some Goffstown residents lost money with FRM. There may be another Ponzi
scheme in operation in Goffstown.
There may be a Ponzi scheme in Goffstown because there may be one in operation in the entire U.S.
First an explanation of a Ponzi scheme is in order.
A “Ponzi scheme” (designed by the infamous Charles Ponzi) is simply a plan to pay current financial obligations
from future contributions. It works something like this: Five people are asked to give $5 dollars each with a
promise that they will double their money. Two people from the original five are given $10 each and the schemer
pockets the remaining $5 as profit. Everyone is then told to get 10 new people with the same arrangement. Ten
new people give $5 each ($50 total) and $10 is paid to the other 3 original investor and 1 new investor. The
schemer then pockets $10 as profit. Soon the word gets out that people are doubling their money and there is a
long line of voluntary contributors (greed is a wonderful thing – not!) This scheme can work as long as it is
possible to keep growing contributors. When it is mathematically impossible to grow contributors, the scheme
At this point, the schemer pockets all the money, runs fast and creates the next Ponzi scheme.
A “Ponzi scheme” has been in place in the U.S. William H. Gross, Managing Director of Pimco, the largest bond
fund in the U.S. explains it this way: http://www.pimco.com/Pages/RunTurkeyRun.aspx:
“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. Public debt, actually, has always had a Ponzi-like characteristic. Granted, the U.S.
has, at times, paid down its national debt, but there was always the assumption that as long as creditors could
be found to roll over existing loans – and buy new ones – the game could keep going forever. Sovereign countries
have always implicitly acknowledged that the existing debt would never be paid off because they would “grow”
their way out of the apparent predicament, allowing future’s prosperity to continually pay for today’s finance.”
“Now, however, with growth in doubt, it seems that the Fed has taken Charles Ponzi one-step further. Instead of
simply paying for maturing debt with receipts from financial sector creditors – banks, insurance companies,
surplus reserve nations and investment managers, to name the most significant – the Fed has joined the party
itself. Rather than orchestrating the game from on high, it has jumped into the pond with the other swimmers. One
and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is
telling the markets not to worry about our fiscal deficits; it will be the buyer of first and perhaps last
resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will
just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not.”
Guess who gets to pay off that debt? Guess where prices and property taxes are going? Up!
I just thought
that you had a “Right to Know” (R2K.)