*****The Structure of a Ponzi Scheme*****

The US government (specifically the Exchange Stabilization Fund (ESF)) is running a Ponzi scheme, and Ponzi schemes require two levels of deceptions:  one aimed those who aren' t aware anything is wrong and one aimed those who know there is fraud.

The Madoff Ponzi scheme illustrates this.





Greedwatcher reports that Madoff Auditor Pleads Guilty; Denies Knowing About Ponzi Scheme.

Tuesday, November 3, 2009
Madoff Auditor Pleads Guilty; Denies Knowing About Ponzi Scheme

As expected,
David G. Friehling, the former accountant to Bernard Madoff pleaded guilty on November 3, 2009 to nine counts of fraud and other charges in connection with his auditing work for Madoff's firm. …

… However,
he denied any knowledge of Mr. Madoff's Ponzi scheme and said HE ENTRUSTED HIS OWN RETIREMENT AND HIS FAMILY'S INVESTMENTS TO MR. MADOFF in and in what he said was "the biggest mistake of my life, I placed my trust in Bernard Madoff," saying HE HAD ABOUT $500,000 WITH THE MADOFF FIRM.

Mr. Friehling [<<< TRUE SUCKER] faces a statutory maximum of 114 years in prison on the charges,

Financial Times reports that Wall Street insiders and fools' gold.

Wall Street insiders and fools' gold
By John Gapper
Published: December 17 2008 19:37 | Last updated: December 17 2008 19:37

Pinn illustration

If Bernie Madoff has lost $50bn (—‚¬35bn, ÂŁ32bn) of other people' s money, as he is said to have admitted,
why did they trust him with it?


It is an old story:
the allure of the Wall Street insider. No one thought that Mr Madoff was operating a Ponzi scheme but plenty of people thought he had an unfair advantage. He was a former Nasdaq chairman and one of Wall Street' s biggest marketmakers. Enough said.


many Wall Street veterans thought Mr Madoff was up to something.

They did not think he was recycling client funds, according to Mr Blodget;
they suspected that he was using inside information from his big marketmaking operation to “front-run” trades for his clients. That would have explained his oddly consistent high returns.


Mr Madoff made this point himself at a debate last year at the Philoctetes Centre in New York. He first brazenly asserted that
it was “impossible for an [insider trading] violation to go undetected, certainly not for a considerable period of time” because of regulatory safeguards.


HE HAD A NETWORK OF FINANCIAL ADVISERS, MANY OF WHOM HAD INVESTED THEIR OWN CASH, WHO PORTRAYED INVESTING WITH MR MADOFF AS A PRIVILEGE. It was a Main Street version of the access that institutional investors and foundations had to private equity and hedge funds.

Finance Yahoo reports that I Knew Bernie Madoff Was Cheating, That's Why I Invested with Him.

I Knew Bernie Madoff Was Cheating, That's Why I Invested with Him
Posted Dec 12, 2008 12:45pm EST by Henry Blodget
From ClusterStock.com, Dec. 12, 2008:

Interesting tidbits coming in about Bernie Madoff (read indictment here).

Specifically, we're hearing that
THE SMART MONEY KNEW BERNIE HAD TO BE CHEATING, because the returns he was generating were impossibly good.  Many Wall Streeters suspected the wrong rigged game, though: THEY THOUGHT IT WAS INSIDER TRADING, not a Ponzi scheme. And here's the best part: That's why they invested with him.

For years and years I've heard people say that [Bernie's] investment performance was too good to be true. The returns were too steady -- like GE earnings under Welch -- and too high given the supposed strategy.

So why did these smart and skeptical investors keep investing?
They, like many Madoff investors, assumed Madoff was somehow illegally trading on information from his market-making business for their benefit. They didn't consider the possibility that he was clean on that score but running a good old-fashioned Ponzi scheme.

In the Ponzi scheme Madoff, there were a large number of people who knew there was fraud.  In fact, the participation of these people (ie: Madoff's auditor) were essential for the fraud to work.  However, these people (ie: Madoff's auditor) would never have participate in the fraud if they knew it was a ponzi scheme, doomed to collapse with devastating consequences for all those involved.  That is why Madoff lied to them about the nature of the fraud, inventing a “fake” or “imaginary fraud” (“he was using inside information to "front-run" trades”).

All ponzi schemes require such “imaginary frauds to work.  “Imaginary frauds (also called "conspiracy theories") are easy to detect because they have five defining characteristic:

1)  "Imaginary frauds" are elitist.  This is so those “suckers” feel special or “privileged” for participating in the fraud and don' t ask too many awkward questions.

2"Imaginary frauds" are relatively benign (ie: insider trading is a victimless crime).  This is so those “suckers” which get involved in the ponzi scheme don' t understand the risk they are taking.  (If Madoff HAD been a case of insider trading, Mr. Friehling would not be facing 114 years in prison)

3"Imaginary frauds" are open ended (there is no limit to how long they can go on).  This is so those same "suckers" don't understand the true likelihood of the fraud being revealed to the world.  Mr. Friehling (Madoff's auditor) thought that if he correctly did his job of hiding the fraud (which he did) there was no risk of discovery.  He was wrong.

4)  "Imaginary frauds" are mastermind-type frauds.  The people running them are (ie: Madoff) are in complete control of the situation, and their strange actions
are part of some (imaginary) master plan.  The complete opposite of the reality (it' s an out of control Ponzi scheme doomed to collapse).

5Since "imaginary frauds" aren' t real, they are easily disproved.  “Imaginary Frauds” are 100% theorizing and 0% fact.  This is also incredibly useful for discrediting those who correctly warn about the Ponzi scheme itself.

Mr Madoff … brazenly asserted that it was “impossible for an [insider trading] violation to go undetected, certainly not for a considerable period of time” because of regulatory safeguards.

The ESF' s dollar Ponzi scheme

The US Ponzi scheme (run by the ESF) also requires the participation of a large number of people.  Again, these people would never have gotten involved if they knew they were part of a doomed Ponzi scheme.  So there are a great many “Imaginary frauds”:

Hiding evidence of UFOs (victimless crime, no end date, not one shred of credible evidence, definitely mastermind)
The New World Order (noble crime, no end date, no evidence, also mastermind)
The Illuminati (victimless crime, no end date, not one shred of credible evidence, also mastermind)
HAARP weapon system (noble crime, no end date, defies the laws of physics, being done by people who can defy the laws of physics)
Abiotic Oil (noble crime, no peak oil, based retarded idea that earth' s crust magically produces an infinite supply of oil, being done by those who control the world' s oil)
Etc



Just because there are people in the US military convinced UFOs are real or mainstream journalists who believe they are part of a “new world order” doesn' t make it true.  Those people are suckers who will discover (like Madoff' s auditor) that anyone involved in a ponzi scheme suffers when it collapses, regardless of whether they understood what they were doing.

Don' t make the mistake of thinking government propaganda is only found in mainstream media!

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8 Responses to *****The Structure of a Ponzi Scheme*****

  1. Jeff Mitchell says:

    "So there are a great many “Imaginary frauds”:

    Hiding evidence of UFOs (victimless crime, no end date, not one shred of credible evidence, definitely mastermind)
    The New World Order (noble crime, no end date, no evidence, also mastermind)
    The Illuminati (victimless crime, no end date, not one shred of credible evidence, also mastermind)
    HAARP weapon system (noble crime, no end date, defies the laws of physics, being done by people who can defy the laws of physics)
    Abiotic Oil (noble crime, no peak oil, based retarded idea that earth’s crust magically produces an infinite supply of oil, being done by those who control the world’s oil)
    Etc…"

    If you believe all of the above are nonsense "conspiracy theories" and have no basis in fact whatsoever, you are much more of an idiot than one would normally suspect by reading your other posts. That, or you are nothing more than a troll working for who knows what (or whom . . .).

    • Eric deCarbonnel says:

      After nearly three years of research, I have found mountains of evidence of fraud in the gold markets, stock markets (naked short selling), media dishonesty, etc... It is on this website.

      Yet I have found no credible evidence of UFOs, new world order, etc...

      I believe in the fraud, not the "conspiracy theories".

      To put it simply, we both agree on the fraud. You say it is "new world order" , I say it is a ponzi scheme being run by the ESF, which is a real, increadibly powerful government agency operating without any oversight.

  2. jg says:

    Sounds plausible, Eric, your rejoinder about this -- NWO, etc. -- being a fraud and cover for ESF activities. Eye opening stuff; keep up the great work (I just sent you a donation).

  3. Mark says:

    I enjoy all the information on government financial "innovation" (government ponzi schemes go back to the South Sea bubble lol)

    Why are the comments on the article about aids closed?

    • Eric deCarbonnel says:

      "Why are the comments on the article about aids closed?"

      It must have accident. Thanks for letting me know. Comments on the article about aids are now open.

  4. Rock says:

    right Eric, there is no conspiracy. Bankers plan to take over the world is hard proof, not conspiracy theory.

    • Eric deCarbonnel says:

      I particularly dislike the "bankers-control-the-fed" conspiracy for three reasons:

      1) I am directly connected to it. My great-grandfather was Franc Vanderlip, one of the "evil bankers" that helped conceptually design the Federal Reserve. This is the opposite of the truth. For the reality, read my entry:

      *****Washington Responsible For Fiat Money, Not Wall Street*****

      2) Read the hearings on the gold reserve act of 1934. The one of the key justification for creating the ESF was to take control of the Fed "out of the hands of bankers". The ESF, one of the most vile agencies ever created, owes its existence to the "evil bankers" propaganda.

      3) Economically speaking, the "group of bankers control the fed" makes no sense. Inflation benifits irresponcible borrows (the treasury) while completely wrecking the banking sector. The day the dollar collapses, the US financial system will literally cease to exist. Why in the world would bankers conspire to commit financial suicide in this way?

      ------------------------

      To quote my great-grandfather as he (and other bankers) campaigned AGAINST the fed's creation on October 31, 1913:

      "The notes proposed are fiat notes. They have no reserve whatever provided by the Government, and they are to be lent without limit to a number of banks. There is no case in all history where a nation has started on an issue of fiat money that the result has not been a complete breakdown of the financial system of that country.”

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