>Oh wait, I forgot, I just described a pyramid scheme.
>Last time I checked, it was illegal.
Ponzi never missed an interest payment to any of his investors.
It was only after he was shut down that his investors lost their money. (Actually, it could be said that Ponzi's mistake was paying dividends to early, as we all know that growth companies should not pay dividends)
People who gave their money to Ponzi received great returns. This gave them both real wealth and a perception of wealth which they in turn spent on goods and services which helped the ecomony (and many used their returns to reinvest with Ponzi, sorta like a dividend reinvestment program). If the economy is strong, then everyone benefits.
The authorities said that Ponzi's model wouldn't work because he was using money from new investors to pay old investors, however they never took into consideration what he might do in the future and totally ignored the value of the 'brand name' of Ponzi. If one to judge Amazon solely on its book business, it could be proved mathamatically that they can never earn a profit. This is similiar to what Ponzi was charged with. We all know that the value in AMZN is not what it is doing today, but what it can do in the future -- Ponzi should have been given the same consideration.
Had Ponzi not been shut down so early he could have used his 'brand name' and increased value as currency to buy existing businesses. Hell, I'll bet he would have even been able to sell convertible debentures!
Imagine how rich Ponzi's original investors would be the day that Ponzi.com IPO'd
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(the above, of course, was all said with tounge firmly placed in cheek)
--Tony |
