The Biggest Ponzi Scheme In The History Of The World

Tyler Durden's picture

Submitted by Michael Snyder of The Economic Collapse blog,

Did you know that you are involved in the most massive Ponzi scheme that has ever existed?  To illustrate my point, allow me to tell you a little story.

Once upon a time, there was a man named Sam.  When he was younger, he had been a very principled young man that had worked incredibly hard and that had built a large number of tremendously successful businesses.  He became fabulously wealthy and he accumulated far more gold than anyone else on the planet.  But when he started to get a little older he forgot the values of his youth.  He started making really bad decisions and some of his relatives started to take advantage of him.  One particularly devious relative was a nephew named Fred.  One day Fred approached his uncle Sam with a scheme that his friends the bankers had come up with.  What happened next would change the course of Sam's life forever.

Even though Sam was the wealthiest man in the world by far, Fred convinced Sam that he could have an even higher standard of living by going into a little bit of debt.  In exchange for IOUs issued by his uncle Sam, Fred would give him paper notes that he printed off on his printing press.  Since the paper notes would be backed by the gold that Sam was holding, everyone would consider them to be valuable.  Sam could take those paper notes and spend them on whatever his heart desired.  Uncle Sam started to do this, and he started to become addicted to all of the nice things that those paper notes would buy him.

Fred took the IOUs that he received from his uncle and he auctioned them off to the bankers.  But there was a problem.  The IOUs issued by Uncle Sam had to be paid back with interest.  When the time came to pay back the IOUs, Uncle Sam could not afford to pay back the debts, pay the interest on those debts, and buy all of the nice things that he wanted.  So Uncle Sam issued even more IOUs than before so that he could get enough notes to pay off his debts.  As time rolled on, this pattern just kept on repeating.  Uncle Sam repeatedly paid off his old debts by taking out even larger new debts.

Meanwhile, since the notes that Uncle Sam was using were backed by gold, everyone else in the world decided to start using them to trade with one another.  This was greatly beneficial to Uncle Sam, because the rest of the world was glad to send him oil, home electronics, plastic trinkets and anything else that Uncle Sam wanted in exchange for his gold-backed notes.

Eventually, however, the rest of the world started to suspect that the number of gold-backed notes that Uncle Sam was issuing far exceeded the amount of gold that Uncle Sam actually had.  So the rest of the world started to trade in their notes for gold.

And by that time Uncle Sam definitely did not have enough gold to back up his notes.  Realizing that the scheme was starting to collapse, one day Uncle Sam announced that his notes would no longer be backed by gold.  But he insisted that the rest of the world should continue using his notes because he was the wealthiest man on the planet and everyone should just trust him.

And the rest of the world did continue to trust him, although it wasn't the same as before.

As Uncle Sam got greedier and greedier, he started to issue IOUs and spend notes at a rate that nobody ever dreamed possible.  The great businesses that Uncle Sam had built when he was younger were starting to decline, and Uncle Sam started buying far more stuff from the rest of the world than they bought from him.  The rest of the world was still glad to take Uncle Sam's notes because they used them to trade with one another, but they started accumulating far more notes than they actually needed.

Not sure exactly what to do with mountains of these notes, the rest of the world started to loan them back to Uncle Sam.  It eventually got to the point where Uncle Sam owed the rest of the world trillions of these notes.  Even though the notes were losing value at a rate of close to 10 percent a year, Uncle Sam somehow convinced the rest of the world to loan him notes at an average rate of interest of less than 3 percent a year.

One day Uncle Sam woke up and realized that the amount of debt that he owed was now more than 5000 times larger than it was when Fred had first approached him with this ill-fated scheme.  Uncle Sam now owed more than 16 trillion notes to his creditors, and Uncle Sam had already made future financial commitments of 202 trillion notes that he would never be able to pay.  Meanwhile, the notes that Fred had been printing up for Uncle Sam were now worth less than 5 percent of their original value.  Uncle Sam was becoming concerned because some of his other relatives were warning that this whole scheme was about to collapse.

Sadly, Uncle Sam did not listen to them.  Uncle Sam knew that if he admitted how fraudulent the financial scheme was, the rest of the world would quit sending him all of the things that he needed in exchange for his notes and they would quit lending his notes back to him at super low interest rates.

And if the rest of the world lost confidence in his notes and quit using them, Uncle Sam knew that his standard of living would go way, way down.  That was something that Uncle Sam could not bear to have happen.

When a financial crisis almost caused the scheme to crash in 2008, a desperate Uncle Sam went to Fred and asked for help.  In response, Fred started printing up far more notes than ever before and started directly buying up large amounts of IOUs from Uncle Sam with the notes that he was creating out of thin air.  Fred hoped that the rest of the world would not notice what he was doing.

It seemed to work for a little while, but then an even worse financial crisis came along.  Once again, Uncle Sam started issuing massive amounts of new IOUs and Fred started printing up giant mountains of new notes to try to fix things, but their desperate attempts to keep the system going were to no avail.  The rest of the world started to realize that they had been sucked into a massive Ponzi scheme, and they lost confidence in the notes that Uncle Sam was using.  Suddenly nobody wanted to lend notes to Uncle Sam at super low interest rates anymore, and people started asking for far more notes in exchange for the things that Uncle Sam wanted.

Uncle Sam's standard of living dropped dramatically.  Since he could no longer flood the world with his notes, Uncle Sam could not continue to consume far, far more wealth than he produced.  Uncle Sam sunk into a deep depression as he watched the scheme fall apart all around him.

Uncle Sam had once been the wealthiest man on the entire planet, but now he was a broke, tired old man that was absolutely drowning in debt.  Unfortunately, once he was down on his luck the rest of the world did not have any compassion for him.  In fact, much of the rest of the world celebrated the downfall of Uncle Sam.

All of this could have been avoided if Uncle Sam had never agreed to Fred's crazy scheme.  And once Uncle Sam made the decision to stop backing his notes with gold, it was only a matter of time before the scheme was going to collapse.

Does this little story sound crazy to you?  It shouldn't.  The truth is that you are involved in such a scheme right now.  In case you haven't figured it out, "Uncle Sam" is the United States, the "notes" are U.S. dollars, and "Fred" is the Federal Reserve.

Please share this story with as many people as you can.  Our country is headed for complete and total financial disaster, and we need to get people educated about this while there is still time.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Kirk2NCC1701's picture

The biggest Ponzi = PEOPLE

NotApplicable's picture

The saddest thing about this article is the fact that it had to be written.

ZerOhead's picture


It would be a great idea to get something like this into the public school system with an unhappy ending where the children lose all of their i-gadgets to the bankers...

TruthInSunshine's picture

How timely -

From fantastic OP/ED in, of all places, the New York Times:

The Federal Reserve’s Framers Would Be Shocked

  • Published: June 22, 2013

ONE hundred years ago today, President Woodrow Wilson went before Congress and demanded that it “act now” to create the Federal Reserve System. His proposal set off a fierce debate. One of the plan’s most strident critics, Representative Charles A. Lindbergh Sr., the father of the aviator, predicted that the Federal Reserve Act would establish “the most gigantic trust on earth,” and that the Fed would become an economic dictator or, as he put it, an “invisible government by the money power.”

Had the congressman witnessed Ben S. Bernanke’s news conference last week, he surely would have felt vindicated. Investors, traders and ordinary citizens listened with rapt attention as Mr. Bernanke, the Fed chairman, spoke of his timetable for scaling down stimulative bond purchases. “If things are worse, we will do more,” he said of the nation’s economy. “If things are better, we will do less.”

In 1913, few of the framers of the Fed anticipated that the institution would do anything of the sort. The preamble to the act specified three purposes: to furnish “an elastic currency,” to provide a market for commercial paper so that banks would have more liquidity, and to improve supervision of banks. Regulating the economy was not among them.

The framers saw that the banking system needed reform, but they were sorely divided about how to go about it. Wall Street wanted a strong central bank — preferably under private control. Populists like William Jennings Bryan, Wilson’s secretary of state, insisted that banks answer to the public. But many people from the farm belt, like Lindbergh, were opposed to any powerful financial agency.

The backdrop to the legislation was that the United States, in the late 19th century, suffered frequent financial panics. In 1907, banks ran out of cash and the panic snowballed into a depression. The nation had no central reserve — no agency that, in a crisis, could allocate credit where needed. All it had was J.P. Morgan Sr., who arranged for a private loan syndicate. That was not enough, and, anyway, in the spring of 1913 Morgan died. Leading financiers, like Paul Warburg, a German immigrant who wanted to replicate the Reichsbank in his adopted home, thought the United States needed some coordinating agency. They thought that the system was too decentralized.

Many ordinary Americans disagreed. They thought banking was too centralized already, and that credit shortages were the fault of uncompetitive practices on Wall Street. Over the winter of 1912-13, Congress staged sensational hearings to unmask the “money trust” — a supposed conspiracy among the biggest banks. The hearings did not uncover evidence tying credit shortages to collusive behavior. They did establish that Wall Street tycoons were overly clubby with one another — especially in the distribution of securities — and not exactly beacons of free competition.

The Democrats, who won control of Congress in 1912, promised in their platform to free the country “from control or domination by what is known as the money trust.” What’s more, they specifically opposed the creation of a “central bank,” which the delegates saw as a stalking horse for the money trust.

THUS, supporters of the Federal Reserve legislation faced a delicate problem: how to fashion a centralizing agency and not run afoul of the strong popular sentiment against centralization.

Representative Carter Glass of Virginia, the chief sponsor of the Federal Reserve Act, embodied this dichotomy. Before 1913, his claim to fame was helping to draft a state constitution that had disenfranchised African-Americans. He was an ardent champion of states’ rights. Like most Southern Democrats, he wanted to restrain federal authority — in banking as well as in race relations. Laissez-faire Democrats since Jefferson and Jackson had opposed central banks, and Glass embraced that tradition. But he recognized a need for banking reform, and wanted a more elastic currency to avert money panics and moderate depressions.

His solution was to propose privately owned regional reserve banks that would be new centers of banking strength, away from Wall Street. Wilson horrified him by insisting that a Reserve Board sit atop the individual banks. To Glass, this federalist design looked too much like a central bank.

Then Wilson horrified Wall Street by insisting that Reserve Board members be named by the president, rather than by banks. “History and experience unmistakably show that governments are not good bankers,” hissed The New York Times, which typically toed the Wall Street line. The Washington Post accused Wilson of engineering “a colossal political machine.”

Facing Congress on June 23, Wilson touched a popular chord when he said banks should be “the instruments, not the masters, of business.” But he also said that “our banking laws must mobilize reserves.” This had been Warburg’s main goal — to pool banking reserves so they could be tapped as needed.

Historians still debate what the Fed’s framers intended because many details were left vague, and the Fed evolved over time. When the act was signed, in December 1913, few anticipated that the Federal Reserve Board would become so central to the economy, though it did have authority over interest rates. And Glass pledged that the new agency would be restrained by the requirements of the gold standard — which the nation eventually abandoned.

The current Fed would dismay the framers. Glass would be shocked at the power of Mr. Bernanke. Warburg might applaud the Fed’s efforts to temper a recession, while frowning on its printing of “fiat money.”

For some of the same reasons, “end the Fed” is a rallying cry among Tea Partyers, and among critics with a fondness for the gold standard. Representative Kevin Brady, a Texas Republican who is chairman of the Joint Economic Committee, has marked the Fed’s centennial by calling for a commission “to examine the United States monetary policy” and “evaluate alternative monetary regimes.”

The trenchant question is whether nostalgia for “originalism” is a useful guide to policy. Wilson knew well that the Second Bank of the United States — a 19th-century precursor to the Fed — had been left to die, at the insistence of President Andrew Jackson. But Wilson was trying to govern for the present, not to placate his party’s ghosts. Congress today should receive reform proposals in the same spirit.


*Roger Lowenstein is writing a history of the Federal Reserve.

A version of this article appeared in print on June 23, 2013, on page BU4 of the New York edition with the headline: The Fed’s Framers Would Be Shocked.
BoNeSxxx's picture

I disagree vehemently with the statement that the Fed framers would be shocked by today's Fed... It became exactly what they wanted it to be.  Colonel House made no bones (ahem) about it.

SafelyGraze's picture

the article somehow manages to avoid even considering the question of what constitutes money, how fractional reserves operate as probabilistic fraud (X promises to pay Y, but figures there is only a 10% chance that Y will actually take delivery).

the language on the "notes" 100 years ago was and ordinary sentence, written in plain english

"the united states of america will pay to the bearer on demand X dollars"

the note was not the dollar

use versus mention

thing versus reference

ceci n'est pas une pipe


xtop23's picture

We do not need a return to a gold standard. We need competing currencies.

Herd Redirection Committee's picture

Here's where Uncle Sam loses it (on top of the decoupling from gold):

"The IOUs issued by Uncle Sam had to be paid back with interest."

Why would you issue an IOU and promise to pay interest, as well as principal?  Surely you would know what compounding interest will do to the outstanding loan amount?

BoNeSxxx's picture

You know something doesn't smell right about this article... it is WAAAAAAAY to slanted towards the Fed - making it appear that somehow the Fed was perverted only in recent times.

Makes me wonder if they know the show is almost over and they want to make a case for 'reforming' the Fed or somehow returning it to its once wholesome roots.  What a joke.  Its like saying that curing Paris Hilton's Hep C would turn her back into a virgin.

It is a CANCER.  It has always been a CANCER.  And it will ALWAYS BE A CANCER.

The only reform for the Fed is to pull it out, roots and all, default on all debt owed them and lop off the head of any son-of-a-bitch who complains about it.  In fact, lop of their heads just for good measure.

economics9698's picture

Robert McNamara prolonging the Vietnam War for the benefit of his bankers and Freidman got Nixon, the buffoon if there ever was one, to go off gold.

TruthInSunshine's picture

I didn't post that NYT OP/ED because it is any sort of accurate nor deep enough analysis of the reasons for the formation/existence of the Federal Reserve "Bank" (which is the 3rd iteration of the Money Monopolists' favorite tool; just in terms of the United States).

I posted it to show that it's remarkable to see a relatively negative (and relatively massively negative, compared to the ordinary) critique of the Federal Reserve published in a Main Stream Media outlet.

The gist of the critique is that the Federal Reserve has now centralized power on a scale that even many (but maybe not all) of those who supported its creation - in 1910 (with the formal Federal Reserve Act being passed in 1913, enabling the Fed's charter) - could have imagined.

And this is why, I believe, it's being prepared for its latest implosion (which will happen by death in the drowning of the scale and composition of its balance sheet), in order to make way for a far more "conciliatory" and "global" tool of the banking parasites/fiat monopolists.

There will be a new "bank" to replace the Federal Reserve, but it will be far more global in its reach, goals and in the makeup of those who support and fund it, patriotic name that is slapped on it notwithstanding.

fourchan's picture

The creature, aka the System has been working perfectly for a century.


Enslave a free people to debt created out of thin air, confiscate all real money

with paper, and legal edicts, capture all assets through boom and bust cycles the system creates.


Yes, things are moving along perfectly. now get back to work John Gault.

BoNeSxxx's picture

LoL TIS... I figured you forgot the /s tag or meant to come back with more color commentary.  Your position on the Fed has been well established (and appreciated) by all.

My other reaction was that your handle and avatar had been usurped by the NSA... good to see you are still you and the POD People haven't gotten to you ;-)

Redhotfill's picture

I'm all for Fiat if it says "Merica or Uncle Sam somewhere on it rather than Redshield/Warberg/Moses Joo bux conjured from thin air.   Sarc off

xtop23's picture

I don't mind the down votes for saying a Gold standard is a bad idea. Perhaps instead of just down voting you might do a little research and see how easily such a thing can be manipulated. Perhaps not as easily as fiat, but it can be manipulated nonetheless.

Yeah that's just what we need....another monopoly currency. 

You should know better.


lasvegaspersona's picture

The world will NEVER tolerate a return to either the classic gold standard or the gold exchange standard. It will welcome gold as a wealth asset vis a vis the Euro.

johngaltfla's picture

FWIW, IT'S 2345 ET and China is imploding. TOTAL CASH CRISIS NOW:


China is Quietly Creating a Silent Panic in World Markets

Kirk2NCC1701's picture

Competing currencies, you say? They're already competing: QE. A race to the bottom.

g'kar's picture

"No State Shall Make Anything But Gold Or Silver Coin As  Tender In Payment Of Debt"


The framers knew it.

Fish Gone Bad's picture

The reason why paper money did not come up was that the English were counterfeiting the colonial currency.  It gives new meaning to "freedom of the press".

FEDbuster's picture

and now the Bernak is doing the counterfeiting.

Kobe Beef's picture

"The City (of London) never sleeps..."

All Risk No Reward's picture

Exactly.  Consider the source, though.  The New York Times is a corporate front for the money power - so they want to spin information that points away from themselves as the murderouse, thieving lying, debt money tyrants that they are...

It's all fraud - and the NYT will never admit it.

Debt Money Tyranny

Nor with the NYT ever admit that the Fed broke the law to blow up this criminal debt bubble - even though it is trivial to prove beyond and all doubt.

Weapons of Mass Debt

Consequences of Fractional Reserve Banking 2) - Poverty - Debt is not a choice

How to be a Crook

The Creature from Jekyll Island - G. Edward Griffin

The Shadows of Power: The Council on Foreign Relations and the American Decline | James Perloff

Renaissance 2.0

Debunking Money

Dingleberry's picture

Exactly Bone. Qui bono?

Follow the money. It's even more simple than Occam's razor.

pndr4495's picture

Why did the creators of the Federal Reserve System feel the need to be so secretive and deceptive , especially with respect to its name ? There is no substantial connection to the federal government and the stock of the Fed is in private hands , with most of said stock being owned by European banking interests. There is but one purpose of the Fed - to make its owners richer than they are already, period. This ain't no Mud Club or CBGB - we ain't got time for that now.

All Risk No Reward's picture

It is worse than that.

Since money is debt, by definition (only coinage excepted), their "richness" is, by definition, our INEXTINGUISHABEL DEBT!


The Fed is a Trojan Horse with the goal of ENSLAVING you and yours.

Their wealth is our poverty!

Debt Money Tyranny

Nor with the NYT ever admit that the Fed broke the law to blow up this criminal debt bubble - even though it is trivial to prove beyond and all doubt.

Weapons of Mass Debt

Consequences of Fractional Reserve Banking 2) - Poverty - Debt is not a choice

How to be a Crook

Redhotfill's picture

Heard of a van that is loaded with weapons,
Packed up and ready to go....


High on a hillside, the trucks are loading,
Everything's ready to roll

When do the wanted dead or alive bankster posters come out offering real money for their slimey hides?

blindman's picture

any nation that gives monopolistic control of "money" printing
over to a private cartel is a nation of ass hats, and
eventually, dung eaters.

Oh regional Indian's picture

The Q, dear BM, is...when the shit hits the fan...

Hu FlungDung?


Diogenes's picture

An elastic currency, is that like a rubber check?

Go Tribe's picture

Only the Times would have the audacity to refer to the criminal banksters of 1913 as " Founders".

BoNeSxxx's picture

Well at least I have something I can share with the hard of thinking...

Shame really.

knukles's picture

Good Lord, ZerO....
Are you suggesting that we indoctrinate our children?

BLOTTO's picture

Yes, imo, the Ponzi Scheme started a long time ago.

This massive ponzie scheme wasnt just created a mere few 100 years ago. North America was just an extension of the OG...not the starting point.

The whole damn planet and its citizens are a part of it -that takes some, ages.


What or who the 'original person(s)' to start it is up for debate and probably a big clue to the meaning of this life...'they' have this whole planet hoodwinked.

EastCoast90's picture

Banking predates all goverment monatary authority.

ZerOhead's picture

Actually I was thinking more along the lines of DE-indoctrination with simple education knuckles...

Besides... it is better than my other idea of having the kids in the elite private schools creating travelling banking clubs called the 'Junior Squids' that go into the public school system and take money from the parents to lend back at interest to their own children who are enrolled in the 'Wise Consumers Club' right?

Winston Churchill's picture

What have you got against Delaware ?

Anyone would think the bank holding companies were incorporated there.

Oh wait.

Never mind

therover's picture

Is the happy ending where the children trade their i-gadgets for guns and kill all the bankers ? 

KickIce's picture

Agreed, apathy and ignorance is the glue that holds it together.

razorthin's picture

Sadder yet is that the right audience won't read it.

thestarl's picture

There are those of us who are aware who are hedged accordingly,those that live in denial and those that are just too fucking stupid to worry about.

Buck Johnson's picture

I know, and when this does happen alot of people are going to commit suicide over their lost future and present.  The US will not be the same anymore and it will be a third world.

kliguy38's picture

the ponzi is much larger and much longer than the time period in the story......Sam was cleaned out completely but even more interesting is how many other "cousins" were cleaned out of their gold by the Ponzi masters....hehehehehe......oh make no mistake the gold is in VERY strong hands and there will be no gold for the peasants when the "time" comes.

The Master's picture

Addendum:  To avoid collapse, Sam plants a pile of dog shit in his own yard and blames it on his neighbor Mamoun's dog.  When Mamoun denies the accusation, Sam goes over to Mamoun's house, beats the shit out of him, and takes all of his oil.

YuropeanImbecille's picture

i actually Laughed Out Loud :]

tarsubil's picture

LOL. Holy moly. I've never clicked on a green arrow before and see it shoot up by 10.