Is the Financial System One Giant Pyramid Scheme?

“To be blunt, what if our entire financial system—as it exists today—is a scam, one that’s hardwired to funnel wealth from the masses to an elite few?”

All the world is a cage today, but how can we avoid it tomorrow?

OPINION ARTICLE

David Tal, Staff Writer
Jennifer Lee, Designer

(First published in the Arbitrage Magazine Issue 4)

“I’m careful,” most think. “I know enough not to get mixed up in these things.”

These are the lullabies people say to comfort themselves. However, as you’ll see, it’s no defence.

Take the case of Bernard “Bernie” L. Madoff. He got caught inside a whirlpool last March, 2009, when he pled guilty to running an elaborate Ponzi scheme that fooled a highlight reel of celebrities, charitable organizations and what many considered to be ‘informed/professional’ investors. The fallout was many tens of billions worth of investments written off into the red—this included the life-savings of many who will now never know a comfortable retirement.

When such high profile scams make headlines, both the victims and the public are left to ask how so many high-powered, intelligent people could be duped so easily. In retrospect, it seems obvious that an eye of caution be directed upon people or corporations who offer inexplicably high or consistent returns on monies invested.

Haven’t these people ever heard the adage that if something sounds too good to be true, it usually is? Such questions generally conclude with people mumbling another adage—buyer beware—and then believing that the same thing could never happen to them.

But what if it can?

What if you, dear reader, are already in the clutches of a similar scam to the one suffered by Madoff’s investors? And what if everyone is in on it, both as victims and perpetrators of the largest financial scam known to human history?

To be more blunt, what if our entire financial system—as it exists today—is a scam, one that’s hardwired to funnel wealth from the masses to an elite few?

Don’t want to believe it?

Well, before you stop reading, how about we play around with this theory?

To start, if we are going to put our financial system on trial, we’ve got to understand how it really works.