Discussion
been thinking recently, about the pyramid schemes from the 80's/90's.
now, i wasnt old enough to get involved, i was still a little spermy, but have been talking to family and friends about them, and they seem intresting logic, and ive heard a fair few different explanations about them
anyway, from what i can gather, the basics are that you have X amount of people, lets say 1000 people, so
1000 people each put a pound in, so the 1st day, the first person gets 1K, then the 2nd day the 2nd person get 1K,and it goes on like that, till everyone has had a grand? am i correct?
then i got thinking, isnt the lottery like a big government run pyramid scheme, just glitzed up to pull the wool over our eyes, and generate some income for themselves?
think about it, x amount of people, spending x amount a week on tickets, for people to win the money put in.
i know its structured differently, as not everyone gets a return, and there is sometimes more than one person that wins the pot, but in my mind, its pretty much there.
is it just another case of them finding out how much money was *potentially* in it, banning it, then creating their own spin on it to generate income for themselves?
almost like drugs i guess, when they realise how much money is to be made in that, they'll become legal, and taxed, like everything else.
do i have a valid point, or am i just bored on my day off?
now, i wasnt old enough to get involved, i was still a little spermy, but have been talking to family and friends about them, and they seem intresting logic, and ive heard a fair few different explanations about them
anyway, from what i can gather, the basics are that you have X amount of people, lets say 1000 people, so
1000 people each put a pound in, so the 1st day, the first person gets 1K, then the 2nd day the 2nd person get 1K,and it goes on like that, till everyone has had a grand? am i correct?
then i got thinking, isnt the lottery like a big government run pyramid scheme, just glitzed up to pull the wool over our eyes, and generate some income for themselves?
think about it, x amount of people, spending x amount a week on tickets, for people to win the money put in.
i know its structured differently, as not everyone gets a return, and there is sometimes more than one person that wins the pot, but in my mind, its pretty much there.
is it just another case of them finding out how much money was *potentially* in it, banning it, then creating their own spin on it to generate income for themselves?
almost like drugs i guess, when they realise how much money is to be made in that, they'll become legal, and taxed, like everything else.
do i have a valid point, or am i just bored on my day off?
TheEnd said:
A pyramid scheme promises to pay out more than they take in, the lottery only pays out a part of what they take in and has money spare to give to weirdo charities.
so (and without fully understanding pyramid schemes) what you've just said, is that the pyramid schemes promise to pay out more than they take in, by which i presume you mean that they dont, then youve said that the lottery only pays out a part of what it takes in, so what you just said, without saying it, is that the lottery is like a pyramid scheme, just honest?
or am i putting 2+2 together and making 17?
A pyramid scheme is unsustainable.
if for example you had one person at the top of the pyramid and they found 500 people to all put a quid in, they get 500 quid.
But at the next level those 500 people have to find 500 people each for them to get their 500 quid.
Thats 250000 people.
Who then have to each find 500 people to make the next tier work.
So thats one hundred and twenty five million people needed for the next tier.
The lottery just pays out a percentage of what it takes in, not even remotely related to a pyramid scheme.
if for example you had one person at the top of the pyramid and they found 500 people to all put a quid in, they get 500 quid.
But at the next level those 500 people have to find 500 people each for them to get their 500 quid.
Thats 250000 people.
Who then have to each find 500 people to make the next tier work.
So thats one hundred and twenty five million people needed for the next tier.
The lottery just pays out a percentage of what it takes in, not even remotely related to a pyramid scheme.
It's about "return on investment".
You convince a punter to give you £100 and you tell him that he will make £20 on that £100 investment.
In reality, you take the £100 and spend it on cars and booze.
In the meantime, you take another £100 from punter number 2. This time, you spend £80 on cars and booze and give the spare £20 to punter 1, who thinks you are a financial genius as the return he expected has materilised.
Of course, you are in big trouvble if punter 1 or 2 want their original investments back, so you encourage punters 1 and 2 to tell their mates all about what a great scheme this is and they should all put £100 into the scheme. So the funds for the scheme originator's lifestyle keeps piling up and the punters think they are getting good returms.
Of course, such schemes are completely unsustainable and eventually the whole stack of cards collapses.
You convince a punter to give you £100 and you tell him that he will make £20 on that £100 investment.
In reality, you take the £100 and spend it on cars and booze.
In the meantime, you take another £100 from punter number 2. This time, you spend £80 on cars and booze and give the spare £20 to punter 1, who thinks you are a financial genius as the return he expected has materilised.
Of course, you are in big trouvble if punter 1 or 2 want their original investments back, so you encourage punters 1 and 2 to tell their mates all about what a great scheme this is and they should all put £100 into the scheme. So the funds for the scheme originator's lifestyle keeps piling up and the punters think they are getting good returms.
Of course, such schemes are completely unsustainable and eventually the whole stack of cards collapses.
Crease said:
TheEnd said:
A pyramid scheme promises to pay out more than they take in, the lottery only pays out a part of what they take in and has money spare to give to weirdo charities.
so (and without fully understanding pyramid schemes) what you've just said, is that the pyramid schemes promise to pay out more than they take in, by which i presume you mean that they dont, then youve said that the lottery only pays out a part of what it takes in, so what you just said, without saying it, is that the lottery is like a pyramid scheme, just honest?
or am i putting 2+2 together and making 17?
A pyramid scheme is unsustainable. Get in quick near the start and you can make money, but eventually it will run out of new people and fail.
The lottery on the other hand, at this particular level is sustainable and profitable too.
Yes, taken to extremes, where the guaranteed payouts wouldn't work if one person bought a ticket, and won a tenner, and it makes a loss, but overall, there are enough people playing to pay everyone with a fixed winning, (3 numbers etc) and the rest is divided up into a variable jackpot.
If takings are down, the jackpot would go down and there would still be money left over to cover running costs and charities.
Because pyramid schemes will always grind to a halt eventually, leaving people at a loss, they have been made illegal.
You can always shut down a lottery overnight, but a pyramid scheme can't just be stopped leaving everyone happy.
A guy I know wanted to offer cheap Rolexes below RRP on Ebay and refused to believe me when I said he was describing a pyramid scheme. Or chose to ignore me cos he knew it was bent.
Basically, let's say he was offering a £2k Rolex on Ebay for £1500. Two people would buy them, he'd buy one Rolex and send it to the first punter, then pocket the rest. Then when two more people bought he'd send the second punter their watch and so on and so forth. Obviously the more it went on the bigger the shortfall would be.
He never went through with it because thankfully he's technologically illiterate but I was dumbfounded when he refused to see the glaring problem in this scheme.
Basically, let's say he was offering a £2k Rolex on Ebay for £1500. Two people would buy them, he'd buy one Rolex and send it to the first punter, then pocket the rest. Then when two more people bought he'd send the second punter their watch and so on and so forth. Obviously the more it went on the bigger the shortfall would be.
He never went through with it because thankfully he's technologically illiterate but I was dumbfounded when he refused to see the glaring problem in this scheme.
Crease said:
so (and without fully understanding pyramid schemes) what you've just said, is that the pyramid schemes promise to pay out more than they take in, by which i presume you mean that they dont, then youve said that the lottery only pays out a part of what it takes in,
so what you just said, without saying it, is that the lottery is like a pyramid scheme, just honest?
100% wrong. so what you just said, without saying it, is that the lottery is like a pyramid scheme, just honest?
right, i think i understand now, the people ive spoken to havnt managed to describe it as clearly as you guys on here.
i see the differences now, i just thought it was x amount of people putting money in.
to be honest, whoever thought of the logic behind it is very clever! its a simple idea, yet pretty complex to pull off
have any of you ever been involved in one?
i see the differences now, i just thought it was x amount of people putting money in.
to be honest, whoever thought of the logic behind it is very clever! its a simple idea, yet pretty complex to pull off
have any of you ever been involved in one?
Oakey said:
A guy I know wanted to offer cheap Rolexes below RRP on Ebay and refused to believe me when I said he was describing a pyramid scheme. Or chose to ignore me cos he knew it was bent.
Basically, let's say he was offering a £2k Rolex on Ebay for £1500. Two people would buy them, he'd buy one Rolex and send it to the first punter, then pocket the rest. Then when two more people bought he'd send the second punter their watch and so on and so forth. Obviously the more it went on the bigger the shortfall would be.
He never went through with it because thankfully he's technologically illiterate but I was dumbfounded when he refused to see the glaring problem in this scheme.
Sounds like a very complicated con!Basically, let's say he was offering a £2k Rolex on Ebay for £1500. Two people would buy them, he'd buy one Rolex and send it to the first punter, then pocket the rest. Then when two more people bought he'd send the second punter their watch and so on and so forth. Obviously the more it went on the bigger the shortfall would be.
He never went through with it because thankfully he's technologically illiterate but I was dumbfounded when he refused to see the glaring problem in this scheme.
Just sell 10 at £1500 each and don't send any!
Eric Mc said:
It's about "return on investment".
You convince a punter to give you £100 and you tell him that he will make £20 on that £100 investment.
In reality, you take the £100 and spend it on cars and booze.
In the meantime, you take another £100 from punter number 2. This time, you spend £80 on cars and booze and give the spare £20 to punter 1, who thinks you are a financial genius as the return he expected has materilised.
Of course, you are in big trouvble if punter 1 or 2 want their original investments back, so you encourage punters 1 and 2 to tell their mates all about what a great scheme this is and they should all put £100 into the scheme. So the funds for the scheme originator's lifestyle keeps piling up and the punters think they are getting good returms.
Of course, such schemes are completely unsustainable and eventually the whole stack of cards collapses.
Thats a Ponzi scheme, different thing.You convince a punter to give you £100 and you tell him that he will make £20 on that £100 investment.
In reality, you take the £100 and spend it on cars and booze.
In the meantime, you take another £100 from punter number 2. This time, you spend £80 on cars and booze and give the spare £20 to punter 1, who thinks you are a financial genius as the return he expected has materilised.
Of course, you are in big trouvble if punter 1 or 2 want their original investments back, so you encourage punters 1 and 2 to tell their mates all about what a great scheme this is and they should all put £100 into the scheme. So the funds for the scheme originator's lifestyle keeps piling up and the punters think they are getting good returms.
Of course, such schemes are completely unsustainable and eventually the whole stack of cards collapses.
cazzer said:
Eric Mc said:
It's about "return on investment".
You convince a punter to give you £100 and you tell him that he will make £20 on that £100 investment.
In reality, you take the £100 and spend it on cars and booze.
In the meantime, you take another £100 from punter number 2. This time, you spend £80 on cars and booze and give the spare £20 to punter 1, who thinks you are a financial genius as the return he expected has materilised.
Of course, you are in big trouvble if punter 1 or 2 want their original investments back, so you encourage punters 1 and 2 to tell their mates all about what a great scheme this is and they should all put £100 into the scheme. So the funds for the scheme originator's lifestyle keeps piling up and the punters think they are getting good returms.
Of course, such schemes are completely unsustainable and eventually the whole stack of cards collapses.
Thats a Ponzi scheme, different thing.You convince a punter to give you £100 and you tell him that he will make £20 on that £100 investment.
In reality, you take the £100 and spend it on cars and booze.
In the meantime, you take another £100 from punter number 2. This time, you spend £80 on cars and booze and give the spare £20 to punter 1, who thinks you are a financial genius as the return he expected has materilised.
Of course, you are in big trouvble if punter 1 or 2 want their original investments back, so you encourage punters 1 and 2 to tell their mates all about what a great scheme this is and they should all put £100 into the scheme. So the funds for the scheme originator's lifestyle keeps piling up and the punters think they are getting good returms.
Of course, such schemes are completely unsustainable and eventually the whole stack of cards collapses.
The more normal pyramid schemes usually involve selling some sort of goods and services but depend on the member of the scheme recruiting more sellers, rather than concentrating on selling the actual product or service.
Each time a new recruit is added to the scheme, the person who did the recruiting gets a form of commission whuich works its way up the "pyramid",
As has been said earlier, at some point, you run out of people to recruit.
Eric Mc said:
A Ponzi is a form of "Investment Pyramid".
The more normal pyramid schemes usually involve selling some sort of goods and services but depend on the member of the scheme recruiting more sellers, rather than concentrating on selling the actual product or service.
Each time a new recruit is added to the scheme, the person who did the recruiting gets a form of commission whuich works its way up the "pyramid",
As has been said earlier, at some point, you run out of people to recruit.
so im guessing, the commision works its way all the way back to the person who originally made the scheme, so they get all the return??The more normal pyramid schemes usually involve selling some sort of goods and services but depend on the member of the scheme recruiting more sellers, rather than concentrating on selling the actual product or service.
Each time a new recruit is added to the scheme, the person who did the recruiting gets a form of commission whuich works its way up the "pyramid",
As has been said earlier, at some point, you run out of people to recruit.
Eric Mc said:
A Ponzi is a form of "Investment Pyramid".
The more normal pyramid schemes usually involve selling some sort of goods and services but depend on the member of the scheme recruiting more sellers, rather than concentrating on selling the actual product or service.
Each time a new recruit is added to the scheme, the person who did the recruiting gets a form of commission whuich works its way up the "pyramid",
As has been said earlier, at some point, you run out of people to recruit.
[stir]Surely thats just MLM.[/stir]The more normal pyramid schemes usually involve selling some sort of goods and services but depend on the member of the scheme recruiting more sellers, rather than concentrating on selling the actual product or service.
Each time a new recruit is added to the scheme, the person who did the recruiting gets a form of commission whuich works its way up the "pyramid",
As has been said earlier, at some point, you run out of people to recruit.
herbalife [cough]
The 'trick' nowadays is to hit a different market.
A couple of years ago there was the 'women empowering women' scam were they sent £1000 to the woman above them and then they 'recruited' 5 women to the bottom of the pyramid. Eventually they reached the top and received £xxx's. Women were investing £1000 getting back £5000 and re-investing trouble was they now needed 25 people, soon the money wasn't going round fast enough (or enough investors), the scheme collapsed with great acrimony.
Tried to explain it to them before they 'invested' but I was robbing them of empowerment because I didn't want women to be free.
I bet it was invented by a man
A couple of years ago there was the 'women empowering women' scam were they sent £1000 to the woman above them and then they 'recruited' 5 women to the bottom of the pyramid. Eventually they reached the top and received £xxx's. Women were investing £1000 getting back £5000 and re-investing trouble was they now needed 25 people, soon the money wasn't going round fast enough (or enough investors), the scheme collapsed with great acrimony.
Tried to explain it to them before they 'invested' but I was robbing them of empowerment because I didn't want women to be free.
I bet it was invented by a man
cazzer said:
Eric Mc said:
It's about "return on investment".
You convince a punter to give you £100 and you tell him that he will make £20 on that £100 investment.
In reality, you take the £100 and spend it on cars and booze.
In the meantime, you take another £100 from punter number 2. This time, you spend £80 on cars and booze and give the spare £20 to punter 1, who thinks you are a financial genius as the return he expected has materilised.
Of course, you are in big trouvble if punter 1 or 2 want their original investments back, so you encourage punters 1 and 2 to tell their mates all about what a great scheme this is and they should all put £100 into the scheme. So the funds for the scheme originator's lifestyle keeps piling up and the punters think they are getting good returms.
Of course, such schemes are completely unsustainable and eventually the whole stack of cards collapses.
Thats a Ponzi scheme, different thing.You convince a punter to give you £100 and you tell him that he will make £20 on that £100 investment.
In reality, you take the £100 and spend it on cars and booze.
In the meantime, you take another £100 from punter number 2. This time, you spend £80 on cars and booze and give the spare £20 to punter 1, who thinks you are a financial genius as the return he expected has materilised.
Of course, you are in big trouvble if punter 1 or 2 want their original investments back, so you encourage punters 1 and 2 to tell their mates all about what a great scheme this is and they should all put £100 into the scheme. So the funds for the scheme originator's lifestyle keeps piling up and the punters think they are getting good returms.
Of course, such schemes are completely unsustainable and eventually the whole stack of cards collapses.
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