A Ponzi scheme needs two actors — a fraudulent businessman or woman who promises high returns for investments into his or her company, and an investor who has been sold the promise of higher than normal (or guaranteed) returns.
Typically, when the money is withdrawn, the early investors receive their high-return money, sparking more investors, while those later investors, as the money runs out or the fraud scheme is exposed, can lose almost everything.
For most, money serves a few purposes. First and foremost, it is a necessity to purchase the essentials of living, such as shelter, food, and clothing. Money also provides security in anticipation of both short- and long-term financial needs, whether it’s surviving a job loss or later being able to retire. Next are the desires — those things we want but neither provide our essentials or security for the future. Socio-economic groups might have differing opinions on the distinction between needs and desires. For some, a television is a desire, for others it is a million-dollar yacht. Regardless, desires are generally regarded as those possessions or services that exceed the necessities of survival.
Finally, there is the money that provides freedom in life. There is another name for it, one that Matt Damon made famous in “Promised Land.” It is the money that comes after the necessities, security, and desires. It is the money that lets you navigate the rest of your life freely. It is the money that lets you quit your job or retire early. It is free of debt or obligation and enough money to do whatever you want for the rest of your life (of course, the less desires, the quicker the freedom).
I think the true winners of our current economic system are those who earn (or inherit, I suppose) their freedom. The game, I think, is to win as young as possible. The younger that you can live your life, the more life you will have to live. The number, of course, is different for everyone and how they live. The money to live quietly on a small farm is less than perhaps for someone who wants to travel the world. Some would like their money to run out at the very moment of their death; others want to leave money to family members or causes they believe in. It’s unpredictable but the point is clear.
Once you have freedom money, by definition, you don’t need any more. You don’t need to work for it, you don’t have to invest it — you’re done. You have enough to live the rest of your life, so why take risks?
We see people who have enough money to last the rest of their lives continue to work, to make business deals, to invest it. Some just can’t stop, it is in their nature; some are just incredibly greedy. Some are talked into risky investments, whether it is in the stock market or opening a restaurant. Certainly, some have insatiable desires. It is not unusual to see athletes, movie stars, and successful business people have enough money for generations but lose it all.
This takes me back to the victims of Ponzi schemes. The stories are, on the one hand, heartbreaking, such as hearing about a couple who worked all their lives and saved up a couple million dollars that would easily provide for their retirement, only to lose it all by being conned into a Ponzi scheme.
But on the other hand, I am furious with these people. They are baited by the desire for more money, to earn an unrealistic return on their money. And they don’t just invest it, they invest it all. What is it about human nature that people would risk their freedom money to earn a higher return on money they don’t even need?
Unfortunately, our world is defined in many respects by money. It is an obsessive desire to have more and more — just for the game of it, to impress friends, or as a scorecard on success. It’s like sitting down at McDonald’s for lunch with 64 Big Macs — what are you going to do with 63 of those Big Macs? Invest them to earn 82 Big Macs?
I think, in a lot of ways, people have forgotten the purpose of money. And for most Americans, our financial journeys are tough enough — we make mistakes, we don’t save enough, we don’t set financial goals. It is too easy to buy things we can’t afford. Most of us have fallen into financial traps. It’s hard to reach “freedom” financial status but it is even harder when we are not aware of that which it really offers.
If you get there, enjoy it. You’re free to do what you want, when you want! If your work brings you pleasure, work without the worry of losing your job. Or maybe travel, volunteer, or spend time with friends or family. Or maybe sit peacefully on your porch with your dog, listening to the birds. Or spend your time in a garden growing big, beautiful tomatoes.
It’s your life. Just don’t risk it — never invest it all, never seek suspiciously high returns, don’t open an expensive business. We work to earn the money we need to buy our freedom — don’t be tempted to jeopardize it for money you don’t need.
Rob Swindell is a lifelong Lorain County resident offering his opinions on politics, science, and social issues. He can be reached at firstname.lastname@example.org.