The Ponzi Economy
Cruz Smith
Park University
EC141 Principles of Macroeconomics
Abstract
Summary of what inflation means to economists. The cause of inflation, the culprits related to inflation, and the different types of inflation fluctuations. Inflation long run impacts to countries, different eras and the methods used to measure inflation. Overall conclusion of inflation and it’s behavior.
We may presume that individuals and global society have the same needs and wants. The economist theories touch on economic perspective, behavior, principle, budget, laws and benefits, except are the theories a true representation of what economy means to individuals and global markets? One such representation of economist theories that is acclaimed by society, individuals and global markets is that of The Ponzi Scheme. Kaushik Basu’s article (2014) “The Ponzi Economy” breaks it down for us by streamlining the actions taken by and individual for their own benefits, wants and needs. The effects it had on the economy and society which triggered the need for increase in awareness for the protection of global economy and economic markets. The state of mind of individuals and the trust in those individuals that hold top positions within an organization may represent great risk in the successful flow of market and economy transactions. The risk will be associated with the rationale thinking of those said individuals, as we may assume that all minds don’t think alike. The necessities of all maybe similar except some will utilize the available resources for a common goal, their own financial gain. They will accomplish their goal s by practicing “Ponzi is a get-rich-quick scheme” , (pg70), which will allow them to use basic marketing tactics to benefit from those that entrust them with their life’s savings promising a high percent return on investment but in reality there is no return at all, they have become victims instead of gaining financially. This type of transactions are a direct hit to the economy, individuals will lose income potential and possibly all their available income which will trigger the need for federal assistance. The real estate market may also be impacted as the same individuals will most likely lose their homes as they no longer have the means to afford their mortgage payments. In a consistent basis the economy may also be impacted by hidden schemes, it is almost safe to assume that consumers can no longer take things at face value. Corporations may over report their financial standings by falsifying their financials and lure consumers to purchase stocks , the corporation looks good in paper but the reality is they are using new investors funds to cover for their losses, this scheme may be referred to as “rob Peter to pay Paul”, (pg 70). The consumer losses become evident when new investments dry
