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Archive for December 18th, 2008

This film clip is related to The Greater Fool Theory: Bernard Madoff’s Ponzi Scam.

What is a “Ponzi scheme”

http://en.wikipedia.org/wiki/Ponzi_scheme

 Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any realbusiness. It is named after Charles Ponzi[1]. The term “Ponzi scheme” is used primarily in the United States, while other English-speaking countries do not distinguish in colloquial speech between this scheme and other forms of pyramid scheme[2].

The scheme usually offers abnormally high short-term returns in order to entice new investors. The perpetuation of the high returns that a Ponzi scheme advertises (and pays) requires an ever-increasing flow of money from investors in order to keep the scheme going.

Now the juicy part of this video is when Peter Schiff says that the national debt of the United States is financed based on a Ponzi scheme. Just check out his statements starting 6:38 of the video. But to really appreciated the way it unravels, watch it from beginning to end.

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Here’s a clear example of how quick generalizations develop. In case you missed it last Sunday, an Iraqi reporter flung his two shoes at U.S. President George Bush, apparently in outrage.

What I find more interesting, is how quickly the idea of “shoes in Arab culture” has grown almost overnight. A quick google search on “Arab, Shoe, Culture” instantly calls up literally hundreds of articles covering the Bush incident and the reference to shoes in Arab culture: (just a few below say the same thing)

Telegraph: Showing the sole of your shoe has long been an insult in Arab culture.

BBC: In Arab culture it’s considered rude even to display the sole of one’s shoe to a fellow human being

Daily Star: Soles of shoes are considered a harsh insult in Arab culture.

Bloomberg: In Arab culture, throwing shoes is a grave show of disrespect.

Which was the saying? If you hear something often enough, you believe it? Or it ceases to have any meaning? Meanwhile, in addition to the above examples of split-second cultural insight, there have been some very interesting “analysis” done on the cultural reference to shoes in the whole affair. (more…)

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