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This tube is about the man who started it all. For his award-wining economic operating system, see Ponzi Scheme.
Charles Ponzi, who gives his name to the Ponzi Scheme, was a notable American entrepeneur in the 1920's. Ponzi was born in Italy but soon emigrated to the United States, where, with just $2.50 in his pocket and a sly look on his face, he proceeded to get fired for theft from a succession of low-paying restaurant jobs until he couldn't stand it anymore and left the US for neighboring Canada. It was in this liberal hippy Bear haven that he learned the fine art of confidence.
Ponzi can also be regarded as one of the first true proponents of modern Capitalist economic theory.
The First SwindlesEdit
Ponzi was originally involved in a Quebec bank that offered low-rate mortgages to risky, poor Canadian farmers and householders. Along with the manager, he was responsible for raising more than $1,000,000 from gullible Canadians in a time when five cents bought you a bottomless cup of coffee. This was the first instance of what would come to be called a Ponzi Scheme - he managed to force Canadian banks to commit fraud though their mortgage system to support the real-estate market.
The Canadian banking collapse initiated by Ponzi had far-reaching consequences in Saskatchewan, where banks allowed borrowers to leverage property that they did not own in order to gain mortgages to purchase that same land. This system of creative banking quickly spread thoughout the northern nation, and eventually caused a major recession and banking collapse. The subprime loans that Ponzi sold artificially inflated the real-estate market and created a bubble. When that popped, so did the Canadian economy, and due to the cloesly entwined nature of the economies of the US and Canada, both of the newly fledged Stock Markets crashed as well.
The Canadian government, in order to cover up the Ponzi that had been played on them and their people, adopted the very practices that had caused it so much harm. This first crash was a direct contributor to the larger crashes and recessions that were to follow, as governments scrambled to hide how badly they had been swindled.
When his partner skipped town with the money, the Mounties arrested Ponzi for these pioneering economic practises, and threw him into a Canadian jail for five years. When they finally let him out, he had to promise to leave Canada and never come back, on pain of waterboarding with poutine. So, returning to his former offices to collect his things, he forged himself a check and got the heck out of dodge.
See Also: The First Crash
The Big ConEdit
For more details, please see Ponzi Scheme.
Ponzi, just about penniless one more time, arrived in Boston in 1918, and immediately set about working the locals through a postal loophole. Through his "Securities Exchange Company" he managed to bilk Heroes out of millions of dollars in just under two years. However, it was a matter of Enron-style creative accounting, and eventually he was called on it by the Liberal Media. His investors made several runs on the SEC, and this combined with a level of intense public and media scrutiny not seen again until the Savings and Loans scandals of the 1970's and 1980's, he was bankrupted and thrown into jail one more time - although this time for mail fraud (which actually was a bogus charge - he was actually guilty at this point only of tax evasion.)
The postal loophole exploited the difference between the values of post-paid envelopes purchased in different countries. For example, an uncancelled US Post-Paid envelope purchased in Japan for 10 yen was worth almost 400 times that value in America. Ponzi pretended to trade in these high-return instruments, until at one point the US Postal Service estimated that 160 million of these odd certificates would have to have been circulating for Ponzi's accounting to be correct. The USPS records showed that just 27,000 were actually printed, a ratio of 5926 Ponzis to one real postal certificate.
The enormous sums of money raked in by Ponzi during the three years in which his SEC operated are considered to be a direct cause of the recessions of the early 1920's, and in turn led to the Greatest Depression later that decade. On the upside, Ponzi was the first person in North America to have central air conditioning in his house, and was also one of the first to have a heated swimming pool. The year was 1921.
Arrests and EscapesEdit
In 1922, it was discovered that Ponzi was actually an Illegal Alien and the decision was taken to stick him in a box, paste on some stamps, and mail him home to Italy. He skipped bail, grew a moustache, ran for Florida, jumped on a ship bound for Italy, and was aprehended two days later in New Orleans. The authorities put him back in the box and didn't let him out for another seven years.
Ponzi always opted to defend himself in court, saying that lawyers were useless wastes of space. In the history of his life and long arrest history (at least 18 arrests), he was only convicted twice; once when he was Conzied in Canada at the very beginning of his career, and the second time for skipping bail.
In the meantime, his smooth-talking, Clintonesque ways got him acquitted of most of the major charges. Once released, he made his way back to Italy and proceeded to creatively account the Mussolini administration out of millions of Lira while working as a Nazi fundraiser.
During the Second World War, Ponzi was directly responsable for the funding of the Italian Fascists and the German Nazi party. Equally, he was to find that his postal scheme had far-reaching consequences. Japan, furious at being Ponzied, demanded its money back from America. The US denied, and Japan declared war on them by bombing Pearl Harbour.
Before he could be discovered and beheaded for creative accounting, Ponzi left the Italy and turned up again in Brazil. He died, blind, paralyzed, and penniless again, in Rio de Janiero in 1949. Nobody is certain, not even Ponzi himself, how much money he took over the course of his life.
Where Did All The Money Go?Edit
During the Greatest Depression, Ponzi realized he couldn't have hundreds of millions of ill-gotten money. So he invested it! Ponzi began investing heavily in the heroin trade, as it was the best place to hide that amount of cash, and it more than doubled his money. He put that profit into the only industry he could find that was comparably profitable to heroin: weapons of mass distruction. Ponzi was a key investor in Westinghouse, General Electric, Ford, Standard Oil, IBM, and a host of other companies. In this way, he managed to profit from both the destruction and rebuilding inherent in any war, the cause of the war, the materials necessary to have the war.
Even given the immense profits that Ponzi must have made on these investments, historians remain unsure that he used even a half of the money he gained in the courses of his scheming.
Posterity and Bear InvolvementEdit
Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi is best remembered for the economic practise that started it all, and which bears his last name to this day. In the current fad of newspeak, he's lending it to the greater group of practises associated with the scheme.
Due to his Nazi and Bear involvement, once he returned to Italy, Ponzi had hundreds of children as part of a clandestine Nazi/Bear gene-splicing project, most of whom he sold to orphanages in his travels. The highest concentration of Ponzi's children were deposited in the continental United States. With the surge of LSD use in the 1960's, the previously dormant Bear genetic traits of his offspring and grandchildren were activated, allowing an entire generation of Ponzi's descendants to wreak havoc on the world.
Despite the higher concentration of PonziBear-hybrid children living in the United States, they are found throughout the world. Evidence of this can be seen in the high number of Ponzi Schemes and other Ponzi-related havoc evidenced in most world countries. A number of his descendants have risen to positions of high political or financial power. In America, they include Prescott Bush and his descendants, the Kennedy family, Bill Clinton and other Rockefellers, Ken Lay, and Bernie Madoff. In Britain, Tony Blair and Margaret Thatcher are the most prominent examples. In Germany, the Rothschild family, the royalty based in Saxe-Meinegen (now the British Royal Family), and any number of discreet Neo-Nazis.
Ponzi's pioneering accounting methods are better known in the modern lexicon as Enron Accounting Practices.
- Ponzi Scheme
- United States of Ponzi
- Quarter Ponzi With Cheese
- Enron Accounting Practices
Do Not Also SeeEdit
- Your Assets