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The Original Ponzi Scheme (And The Man It Was Named For)
A ploy to make money off of stamps
Most people understand the basics of a Ponzi Scheme. Anyone who has dug into a multilevel marketing scheme pitched to them on Instagram understands the fundamentals. Investors at the bottom pay into the system. That money ends up paying investors closer to the top. The bottom investors are given something to sell, and they are tasked with convincing more people to pay into the bottom layer. And the scheme persists until it runs out of new investors and the whole thing collapses.
Despite the prevalence of pyramid schemes and names like Bernie Madoff, few people know about Charles Ponzi and the original method that bears his name.
Charles Ponzi was a con man by trade, but he didn’t mean to invent the Ponzi Scheme. He bumbled into it after having a legitimate idea. An idea to make money by trading stamps.
Stamps and Arbitrage
In the wake of World War I, Europe was reeling. Millions of dollars flowed from London to New York. Americans were flush with cash, and Europeans were trying to put together the shattered…
