Wednesday, February 3, 2010

Ponzi scheme on the Potomac

The U.S. attorney general recently announced that the Justice Department is beefing up its efforts to fight financial fraud such as Ponzi schemes. Good. The agency should start by reviewing the spending habits of the federal government, which is running the largest Ponzi scheme our country has ever seen.

In a Ponzi scheme, organizers create the illusion of profit for early investors by siphoning money from later participants. It works until there is not enough income to pay the promised dividends, exposing the fraud and leaving everyone broke. That is essentially what the federal government is doing, as it continues to spend and promise far more than can ever be paid for by current and future revenues.
Ponzi scheme on the Potomac

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