Post Reply Pyramid Schemes
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Posted 3/29/15 , edited 3/29/15
So I did google it and I still don't understand pyramid schemes. I thought maybe I could find a better explanation here. So could someone explain to me why its bad?
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Posted 3/29/15
"The Fraud
The problem is that the scheme cannot go on forever, because there are a finite number of people who can join the scheme (even if all the people in the world were to join). People are deceived into believing that by giving money, they will make more money; however, no wealth has been created, no product has been sold, no investment has been made, and no service has been provided"

Source: http://www.investopedia.com/articles/04/042104.asp


In other words, it's the use of trickery to make a very select few rich without actually selling or providing any services.
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Posted 3/29/15 , edited 3/29/15
You basically pay to join an organization and they pay you a percentage of the money paid by those you influence to join. There's no actual business going on so the only actual income is from people paying to join the organization. The scale increases and increases, making it unsustainable.

It's bad because there's no actual business. No product or service is really being provided and only the guy at the top is actually earning money.
Posted 3/29/15
Such organizations seldom involve sales of products or services with real value. Without creating any goods or services, the only ways for a pyramid scheme to generate revenue are to recruit more members or solicit more money from current members. Eventually, recruiting is no longer possible and the plurality of members are unable to profit from the scheme.

Basically it's a scam to get others to pay into something that gives nothing or that's my understanding at least.
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Posted 3/29/15 , edited 3/30/15
Welcome to NHK <-- it's an anime
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Posted 3/30/15

What's interesting about pyramid schemes is some people can see through them as scams instantly, and then there's others that just get taken in every time.
Posted 3/30/15
egyptians be cray yo
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Posted 3/30/15
You deserve this Mr.Swaggercandy, for making such a vapid thread.

wyrvan 
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Posted 3/30/15
In the mid 90's in Albania, the pyramid schemes were so big that when they collapsed they wiped out half of the country's GDP and collapsed the government. About two thousand people died in the resulting chaos.

source: International Monetary Fund.
http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm
Vatta 
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Posted 3/30/15

onibrotonel wrote:

Welcome to NHK <-- it's an anime


I was about to recommend N.H.K, it explained it really well.
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Posted 3/30/15

Vatta wrote:


onibrotonel wrote:

Welcome to NHK <-- it's an anime


I was about to recommend N.H.K, it explained it really well.


Two people beat me

Anyway...pyramid schemes are crap setups to make the top rich. Recruiting people to be the "bottom" rungs of the "social ladder" in the "society", or at least for some, I believe.
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Posted 3/30/15
a family member of mine joined amway and once he did we all told them that that was a pyramid scheme (legal one at that)in which he was slated to lose money.but he didnt listen bought the crappy products and didnt sold a single one while he lost money on it.hope that he learned his lesson
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Posted 3/30/15 , edited 3/30/15
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Posted 3/30/15
Herbalife?
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