Kathy Petersen’s Blog

This Economy is one big Ponzi Scheme

Posted in politics by Kathy on February 14, 2009

In my understanding, a “Ponzi Scheme” is basically a pyramid scheme, ultimately destined for failure, because it pays the people at the top by recruiting more people at the bottom; eventually there are no more bottom people to recruit, and the whole scheme collapses under its own weight. That’s what’s happening to the economy.

It’s no longer built on a solid foundation — it’s built on credit and debt. Yet instead of encouraging people to return to cash, and living on their income, the government is encouraging more people to join in this pyramid scheme to increase debt. It is destined to fail, because you can’t borrow your way out of debt.

Unfortunately, the alternative involves more short-term pain, and people are unwilling to do that. So, we’re going to collapse like the Twin Towers, and then we’ll be crushed. And although I’m not an economist, I believe that when it happens, it will be worse than the Great Depression.


2 Responses

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  1. Sheridan said, on February 17, 2009 at 3:34 am

    This is so true! Honestly it is all because of credit and not living off what we have. What about living within our means? That is the only thing that will solve this problem.

  2. Hmmmm « The adventures of our family of 5 said, on February 17, 2009 at 3:40 am

    […] Hmmmm This summarizes how I feel about our economy.  Too much debt! […]

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