April 11, 2015
Why is it important to know who Bernie Madoff was and what he did (and how he did it)?
Why is it important to know who Bernie Madoff was and what he did (and how he did it)?
Bernie Madoff is a criminal. His main crime was operating the largest Ponzi Scheme in history. The operation of a Ponzi Scheme is that people are recruited to give the person who starts the scheme money. Then the next year they need to recruit more people to pay them. This continues with more new people coming in and giving money to the people who were in the scheme before them money. The money is proliferated to the top and as long as you have more people to give money the scheme seems to be working. Everyone is getting more money. The scheme runs out when there is no one left to take money from.
Bernie Madoff ‘s main crime was really greed. He also didn’t practice short term deprivation of apparent happiness for long term freedom. He wanted it all and he wanted it now. He didn’t realize that he had enough all those years ago. He was chasing money as a goal when happiness should be the goal. He should have read Financial Happine$$ and he would have realized that money itself doesn’t bring happiness. You can always get more money but if you do it by hurting people it’s not worth anything. Your word is worth more than money if you always stick by your word. Don’t lie. It landed Bernie in prison and that is not a good place to be, whatever age.
Bernie Madoff was a con artist and he scammed a lot of people out of a lot of their money. He promised his clients higher returns than what anyone else could get for them, so many people gave their money to him to invest. But the truth was that these ‘higher returns’ was just money being funneled up from new investors; nobody’s money ever actually got invested in anything. It is important to be aware that there are people like this out there waiting to take your money from you. They wont look like or act like someone who is trying to scam you, but if they can’t tell you where your money is going or they’re making you promises that are too good to be true, you need to be informed enough to be able to identify that that’s what’s happening and call their bluff.
Those were informed and thoughtful answers everyone. Well done. Let’s recap.
(1) The crooks in the financial industry don’t look like the crooks in the dark alley. Most of the time they wear suits and ties and look very impressive. Be careful. Your eyes can play tricks on you!
(2) If someone guarantees you double digit returns, RUN. No one can do that. If someone in the boardroom hides information and uses “unique” accounting methods. They are either delusional or a crook. Either way, RUN.
(3) Knowing your history will provide you the education to understand how ponzi schemes work and how you can avoid them. Arm yourself with a financial education! See more on Madoff by going here:https://www.youtube.com/watch?v=cxFBurk12Gs. Learn about Enron and those crooks by going here:https://www.youtube.com/watch?v=Mi2O1bH8pvw.