Economics becomes a science · 1770s–1920s
1920
Charles Ponzi's 50% in 45 days
A Boston scheme pays early investors with later investors' money, and gives the fraud its name.
Charles Ponzi promised investors 50% in 45 days, supposedly from buying international postal reply coupons cheaply abroad and redeeming them in the US. Early investors were paid on time, with the money later investors brought in, and thousands more lined up to join.
In August 1920 newspapers and investigators showed the coupons could never have produced such returns. The scheme collapsed, investors lost millions of dollars, and Ponzi went to prison.
💡 Why it made sense then
Paying the first investors in full made the promise look proven, and each satisfied investor became an advertisement.
🎮 In Journey Shares
Chet Goldbridge's Guaranteed Growth Partners in the city runs the same trick at 20% a week, with play money.
Ideas it gave us
- 🎯 Ponzi scheme
A Ponzi scheme is an investment fraud that pays existing investors with money collected from new investors, while claiming the returns come from a profitable investment. It collapses when new money stops covering what has been promised.
✏️ Suggest an edit🕘 Edit history
Practise with $10,000 in play money
Free. No real money involved.