Since fixed incomes will also suffer from interest rate manipulations, many will fall victim or get seduced to dabble with Ponzi schemes marketed by scoundrels who would use the current policy induced environment as an opportunity to exploit a gullible public.In the US, Ponzi schemes skyrocketed as the US Federal Reserve has taken on a zero bound interest rate environment in response to the recent crisis in 2008.
instead of locking money through interest rate dividends from savings account in the financial institutions, zero bound regime or negative real rates which are part of financial repression have been forcing people to chase on yields and gamble in order to generate returns. So the public have become more of a “risk taker” and take on “greedy” activities in response to such policies. Some would even fall or become victims to Ponzi schemes which I expect to mushroom.
A company managed by a former janitor and driver, and founded just early this year, has duped at least 15,000 people in Mindanao and the Visayas of P12 billion in a pyramid scam, an official of the National Bureau of Investigation said Tuesday.The NBI identified the company as Aman Futures Group Phils. Inc.“Some of the victims committed suicide and others have become violent and sick when they learned their hard-earned money was gone,” said Virgilio Mendez, NBI deputy director for regional operations services, who was investigating the scam.Among Aman Futures’ victims were local politicians, police and military personnel, government workers, market vendors, farmers, drivers, retired employees and overseas Filipino workers, according to Mendez.He said the number of “complainants from across the country is piling up.”
He said Aman Futures was able to lure investors by offering a 30-percent to 40-percent return on investment within eight days, and a 50-percent to 80-percent profit for 18 to 20 days.“The amount of interest varies depending on the investment or money placements,” Mendez said.
He said the victims trusted Aman Futures largely because of endorsements from local officials.“They trusted Aman Futures because even local government officials had openly endorsed it and admitted to have invested also,” Mendez explained.
Inflation, to sum up, is the increase in the volume of money and bank credit in relation to the volume of goods. It is harmful because it depreciates the value of the monetary unit, raises everybody's cost of living, imposes what is in effect a tax on the poorest (without exemptions) at as high a rate as the tax on the richest, wipes out the value of past savings, discourages future savings, redistributes wealth and income wantonly, encourages and rewards speculation and gambling at the expense of thrift and work, undermines confidence in the justice of a free enterprise system, and corrupts public and private morals.