Bubbles, Scams & CrashesFraud

The Ponzi Shape

Old investors are paid with new investors' money

A scheme pays you double, right on time, and invests nothing. Where does your money come from, and how long can it last?

You'll find out

  • Where the "returns" really come from
  • When the scheme runs out of people
  • The signs regulators look for

Why it matters

Every Ponzi scheme looks like a great investment from the inside. Knowing its shape lets you see it from the outside.

About 3 min6 interactive slides · 5 questionsLesson 128 · Zone 15

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More in this zone

  1. 127BubblesWhat a Bubble IsWhen prices float far above what things are worth
  2. 129Crashes25 Years to Get BackThe Dow didn't reclaim its 1929 peak until 1954
  3. 130FraudRed Flags of a ScamGuaranteed, urgent, secret
  4. 131FraudSmart People Don't Get ScammedYoung adults report losing money to fraud more often than older ones
  5. 132Market ManipulationPump and DumpHype a stock, sell it to the crowd, disappear
  6. 133CrowdsTulip ManiaDutch traders bid single tulip bulbs up to fantasy prices, though the crash was smaller than the legend says
  7. 134HerdingFollowing the HerdWe trust a crowd even when it's wrong
  8. 135Fraud HistoryPonzi Wasn't FirstA Boston woman ran the same scheme 40 years earlier