Friday Humor: The ECB Explains What A Ponzi Scheme Is; Awkward Silence Follows

Tyler Durden's picture

From the ECB's Virtual Currency Schemes, aka the "Bash Bitcoin Boondoggle" (p. 27):

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity

Considering that this elucidation comes from the very same entity that launched the SMP, LTRO, OMT, EFSF, ESM, oh, and of course, TARGET2, and whose head said to not short the EUR as there is "no risk" whatsoever in holding said currency, one would expect that this definition is absolutely spot on...

* * *

And as an added bonus, here is the part in which the ECB appears to be so worried about BitCoin taking over as legitimate "legal tender" from the EUR (which the ECB's Coeure said two days ago is as "solid and longlasting as a diamond") it dedicated an entire report to bash the recently conceived electronic currency:

In an extreme case, virtual currencies could have a substitution effect on central bank money if they become widely accepted. The increase in the use of virtual money might lead to a decrease in the use of “real” money, thereby also reducing the cash needed to conduct the transactions generated by nominal income. In this regard, a widespread substitution of central bank money by privately issued virtual currency could significantly reduce the size of central banks’ balance sheets, and thus also their ability to influence the short-term interest rates. Central banks would need to look at their existing tools to deal with this risk (for instance, trying to impose minimum reserve requirements on virtual currency schemes).


The substitution effect would also make it more difficult to measure monetary aggregates and, as a consequence, would affect the relationship between the monetary aggregates as measured and inflation, which is used to gauge risks to price stability in the medium to longer term.


Lastly, on this second aspect, when virtual money is created outside the realm of the central bank and virtual credit can be extended, this may have implications for the way interest rate decisions by the central bank are transmitted through the economy and the central bank’s control over money and credit developments could become less effective.

And while it is one thing for the Chairsatan to say gold is not money but is merely "tradition", it is a whole new level of panic when a major central bank is forced to defend itself against an electronic currency.

h/t woerner

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falak pema's picture

Ecb; like the ABC murders of Agatha Christie. Good laff there! 

redpill's picture

lol @ the ECB unknowingly encouraging people to use Bitcoin by acknowledging it poses a risk of castration for their megalomaniacal central banker madmen

nope-1004's picture

Western economies are a ponzi today.  The term "economy" has be stripped of all ingenuity.  It has morphed into HFT, credit advances, leverage, and finally theft.  The banking system is so far past insolvent, it's not even funny anymore.  This pig is dead.

And if you can't see how bad things are, how banks are being held up with Fed intervention, and how the petro dollar is foreign policy, then you're an idiot.


francis_sawyer's picture

We could never return to a gold standard because gold isn't 'backed' by anything...


redpill's picture

I don't think the down-arrower followed your link.  Hilarious clip though.

malikai's picture

That's a hall of famer right there.

francis_sawyer's picture

Despite 'Friday Humor', some folks just ain't that jolly... I suggest they start drinking heavily...



Richard Chesler's picture

It takes one to know one.


rocker's picture

Sort of like what GE did for years, just to pay a dividend when they were actually bankrupt under Jack Welch.

LibertyForSome's picture


Thanks for the insight, Bridget. Now I can feel much more 'secure' about my 0.25% CD.

Hayabusa's picture

I watched the video... stupid.  Gold it backed by the cost to extract and refine it and of course demand... and there's 5000 years of demand.

cpzimmon's picture

+ 10,000 green up arrows.

Thank you....turned my miserable day into something brighter!

cpzimmon's picture

 + 10,000 green up arrows.

Thank you....turned my miserable day into something brighter!


Dr Benway's picture

How about this for a sweet ponzi. Have your company issue shares and pay dividends out of the proceeds. Attract new granny investors with promises of said dividends. Rinse and repeat for DECADES.

Seize Mars's picture

Benway: Holy crap, that's amazing. It never ceases to amaze me. Anyways, great presentation. did you write that? Well done.

Dr Benway's picture

Thank you! Yes I did write that. Funny thing is, although Aussie LICs may seem a niche subject, it has parallels everywhere. The issues of weblike crossholdings, accounting fraud, share ramping, ponzi business models, HFT manipulation, misleading metrics, etc. Also, the LICs have deep connections with the shadow banking sector, indeed they can be considered part of the shadow banking sector. This is where it all ends:

awakening's picture

Any thoughts about that ANZ open on October 18?

Dr Benway's picture

I don't know anything specific. In general though, the equation is this: If the cost of moving the price of the underlying is lower than the profit from the derivative, the price will be moved. In the ANZ case it was futures I think, or it can be issuing shares, or it can be avoiding debt covenants, there are lots of ways second-order profits can be made from share prices. What determines the cost of moving the price? Mainly the liquidity and volume of the underlying. Since the Australian market has gone full tumbleweed, the cost of manipulating share prices has fallen and the prevalence risen. My favorite new manipulated stock is PPT.

jimijon's picture

Join my Facebook page or like it... Nominate Charle Ponzi!

Zer0head's picture

Marathon Cancelled

looks good on you Mayor Dictator

TruthInSunshine's picture

Oh my!!!

I do hope Mayor Neroberg doesn't cancel the Circus Maximus or Hunger Games!!


I paid quite a bit of tribute for my seats!!

knukles's picture

They "ran" out of 32 oz cups

Say, now about those generators.....

(whatta buncha irresponsible fucktards... so much for the Bloomberg bounce to the Obay ticket... never let a good storm go to waste, eh?)

NotApplicable's picture

Nah, he dun goofed. This just makes it twice as obvious.

malikai's picture

I was thinking the same thing.

Thanks ECB for promoting BTC. Please run an article on the Silc Road next so that you can really get people's attention.

vast-dom's picture

i tell you the only way left to "vote" is via alt currency and PM's and alternatives such as bitcoin will supplant this gov central bank ponzi bullshit! I'm sure by then the banksters will try and "take over" more at "bring to market" virtual currency and thankfully they will go the way of massive large companies (think: record labels, blockbuster and soon to be extinct netflix) and other modern-day unwieldy corporate dinosaurs.

JuliaS's picture

I remember in late 90's media giants started chasing after people downloading music and videos off the internet for free. When cases were publicized, the majority reacted: "What? There's free content on the internet?! How do I get in on the action?"

Mashuri's picture

This is known as the Streisand Effect.  Keep up the free publicity ECB! :)

John Snow's picture

Spot on! My favorite thing about owning phys Au is that it's inaccessible to the banking system. Wasn't interested in Bitcoin until today.

Conrad Murray's picture

lol @ the ECB unknowingly encouraging people to use Bitcoin by acknowledging it poses a risk of castration for their megalomaniacal central banker madmen

lol @ the Tylers finally having amassed a large enough position in BTC to allow them to feel confident enough to throw their voice in the mix regarding (knowingly encouraging) BitCoin...

Obviously I kid.

StychoKiller's picture

If some intrepid journalist had asked them how printing Euroz/$/Yen is not a Ponzi, can you imagine the amount of splutterings and harrumphs? :>D

Eireann go Brach's picture

Did you know Tim Geitner is the illegimiate child from an affair Charles Ponzi had with a donkey on a summer vacation in Ohio!

francis_sawyer's picture

O-HI-o???... Uncle 'Tim's' Cabin...

knukles's picture

Oh my God, no....

Probably a good thing to get folks to the polls....


malikai's picture

Excuse me while I wash my eyes out with nitric acid..

Silver Bug's picture

Haha WOW the ECB runs one of the biggest ponzi schemes on the go. The only one bigger is the FED.

Urban Redneck's picture

If the ECB was legitimately (rationally) worried about currency substitution and its negative impacts on central bank authority and power they would be more concerned about physical USD notes floating around the EU (since there is SIGNIFICANT precedence for the phenomenon) or CHF notes since they come in 1000 denominations .are being freely supplied by the nearby nutty gnomes of the SNB.

financial apocalyptic contagion's picture

just when one had thought he has seen it all

baam! the ECB declares war against virtual currency

crusty curmudgeon's picture

"...and the central bank’s control over money and credit developments could become less effective."

Oh, the horror!

ACP's picture

Yes, without the monopoly, no one would use it.

Melenias's picture

Bankster'll never change

rosethorn's picture

Guess I need to find somebody to trade my World of Warcraft gold coins for physical assets!

toady's picture

Defining themselves out of a job?

Reminded me of that line from Office Space;

"Tell me, what exactly do you do here"?

Zero Govt's picture

"In an extreme case, virtual currencies could have a substitution effect on central bank ...“real” money.."

you mean your virtual electronic "real" money???

all monopolies try to crush competition... the other thing barberous relics, like central banks for example, will do is hamper all progress by whining, dragging their feet, throwing their spoilt-brat toys out the pram

what a brat

we don't need no central bank monopoly scum ...we don't need no rotten cartel banks market please... let competition to these barberous relics commence and consumers have a bright, colourful market of gorgeous money choices rather than these whining old farts holding society back and forcing us to swallow their garbage monopoly product

Mongo's picture

Eat shit and fuck you ECB