Your Questions About Is The Stock Market A Ponzi Scheme

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Steven asks…

How much was Bernard Madoff worth before he began his Ponzi scheme?

Just curious to know if he was decently wealthy before his scam even began, for a debate’s sake.

Justin answers:

Bernard Madoff is an American former financier and convicted felon. Madoff, who served as a non-executive chairman of the NASDAQ stock exchange, pled guilty to an 11-count criminal complaint, admitting to defrauding thousands of investors of billions of dollars and was convicted of operating a Ponzi scheme that has been called the largest investor fraud ever committed by a single person. Federal prosecutors estimated client losses, which included fabricated gains, of almost $65 billion. On June 29, 2009, he was sentenced to 150 years in prison, the maximum allowed. As there is no parole in the federal correctional system, it was tantamount to a life sentence.

Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008. The firm was one of the top market maker businesses on Wall Street, which bypassed “specialist” firms, by directly executing orders over the counter from retail brokers.

He was said to have confessed to his sons first on December 10, 2008, that the asset management arm of his firm was a giant Ponzi scheme—as he put it, “one big lie.” They then passed this information to authorities. The following day, Federal Bureau of Investigation agents arrested Madoff and charged him with one count of securities fraud. The SEC conducted several investigations into Madoff’s business practices since 1999, which critics contend were incompetently handled.

John asks…

Why are most people opposed to SS private accounts?

I figured it out, If I kept my fica payments for 45 years and invested in the dow for the last 45 years, I would have more than doubled my retirement payments compared to SS. Even with this week plunge in the market. Also, private accounts were proposed as being strickly voluntary.
Actually, even a sure bet like CD accounts would give me more.

Justin answers:

People oppose private accounts because they are uninformed and will not do the research. The main opposition to private accounts is that existing retirees depend on the money being paid into the system now. It’s obviously a Ponzi scheme that can’t last forever. I agree that at least some money paid in should be diverted to private accounts. This makes everyone happy. People who think that investing the money in the stock market is “risky” are clueless. Where does everyone think the California Public Employees’ Retirement System invests its money? In Treasury Bonds? Yeah, right. All California public employees are dependent on Cal PERS, yet Cal PERS invests its money completely the opposite of what Social Security does. “If you think education is expensive try ignorance…”

Michael asks…

When will Republicans try to sell us on the old notion of investing our Social Security in the stock market?

AGAIN?

Justin answers:

It might be awhile for that one. My very republican neighbor, retired for the last several years because he was ‘smart’ and invested in the stock market and 2nd trust deeds is now looking for a job. I recall him giving me all that right wing radio BS about if a person invested in the market instead of ‘giving the government your money’ in that Ponzi scheme they call Social Security when he retires he’d have 5 to 7 times the amount of income than if he ‘lets the government take care of him’ via worthless government paper. I dunno…..Guess what? His income now is ‘mostly’ his Social Security check. There’s a moral here somewhere…no kiddin’!

David asks…

Is the stock market only up because of the devalued dollar?

Is the ONLY reason the market up at all due to Bernanke printing dollars and issuing debt through the Ponzi scheme of the century making our dollars worth less?

Does the devalued dollar makes it look like stocks are going up when they are really just staying the same?

U.S. Political Risk Could Cause A Recession Next Year
http://finance.yahoo.com/blogs/daily-ticker/u-political-risk-could-cause-recession-next-bob-193207656.html

Justin answers:

It’s election year and Hussein Obama wants to stay in office. The last 4 years he could care less about the economy but now he doesn’t want to loose that cushy job with all the perks and vacations that he gets plus his golf handicap has dropped 15 points while being the president (lots of golf).

Paul asks…

What happened to all the money from the Bernard Madoff Ponzi Scheme?

Where did it all go?

Justin answers:

Lee D has it right. The whole point of a Ponzi scheme, and why it is designed to fail, is that you use new money in part to provide an unusually high return to investors and to pay out requested withdrawals. My guess is that all of the money went to:

The investors

The high life style of Madoff

Lost to the stock market decline.

It wouldn’t make sense for him to have a huge stash somewhere – the whole point was to keep the ball rolling until he died. Having fessed up he knows that he will never be free, so he must have done so when all the dough finally ran out.

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