America’s BIGGEST Ponzi Schemers

When it comes to Ponzi schemers, Bernie Madoff and Lou Pearlman are rank armatures when compared to many of our elected officials.  Can you spell D-e-t-r-o-i-t?

A Ponzi scheme is a FRAUDULENT investment operation that promises to pay BIG returns to its investors.  Problem is, the investors are paid with money gotten from additional investors, NOT from profits made by the investment.  At some point, there aren’t enough additional investors to cover costs.  So the operation goes belly up, and the investors lose EVERYTHING!

Last week, Detroit declared bankruptcy.  It is the largest city in U.S. history to do so.  You see, Detroit owes its retirees $3.5 billion.  One small problem – Detroit is $3.5 billion light of having the $3.5 billion it needs.  In other words, the money promised to pensioners (police, firefighters, schoolteachers and government workers) isn’t sitting in a bank account somewhere.  Instead, money currently collected from taxes is being used to pay the retirees.  But because the city no longer has enough tax money coming in, they were forced to declare bankruptcy – which allows the city to clear ALL of its financial obligations and NOT pay its retirees.  Doesn’t this sound EXACTLY like a Ponzi scheme to you?

How big is this problem?  Pew Center just did a study of sixty-one of America’s largest cities – including New York, Boston and Chicago – and found a gap of more than $217 BILLION in unfunded pension and health care liabilities.

Right now, Detroit (and lots of other big cities) is crying for the federal government to step in and pay their bills.  Problem is, the federal government is almost $17 trillion in debt because they’re running the SAME Ponzi scheme as local governments – but on a MUCH bigger scale!

Got to add: When Detroit and the other big cities ask the federal government to bail them out, they really mean YOU and ME – the taxpayers!  That’s like your neighbor running up a $100,000 credit card debt, then breaking into your home and stealing your money to pay their bills.  In the real world, people go to jail for this…but not politicians – they get reelected by the dumb masses!

For more than ten years, I’ve written this little real estate investing column.  I continually talk about wealth-building, financial freedom, personal responsibility and mailbox money.  Over and over I point out that it is inconvenient to be physically alive but financially dead.  We will all experience a time of great financial sacrifice – but we get to choose whether it’s when we are young or old.  If you will spend a few years living like others won’t, then you’ll be able to spend the rest of your life living like others can’t!

Please make the necessary sacrifices now so you can achieve financial freedom later.  Don’t rely on others – especially the government – to do it for you.  And teach this to your children and extended family.  Remember: You are responsible for you!