Quote from: Marlsfarp on July 21, 2010, 04:22:40 PM

To be fair, a pyramid scheme is not necessarily a scam if it is acknowledged to be a pyramid scheme. Early "investors" will indeed get double their money back, at the expense of the later investors.

Think of it as speculation: "I wager that I will be in the first half of investors." Or really earlier than that, depending on what kind of a cut the "scammer" takes.

Of course, that doesn't make it a smart investment.

Pyramid schemes are not just a scam, but illegal in many jurisdictions and can have even larger consequences. There was one pyramid scheme that before it ran out of steam ended up collapsing the entire economy of Albania as a substantial number of people (including many government employees) got caught up into the concept and lost their shirt. It led to a political overthrow of the government. That is the stuff that really make financial regulators really sweat when they see a pyramid scheme.

Even "legal" schemes like Amway or other "multi-level marketing companies" (to me a very poorly disguised term for a pyramid scheme) have their problems and I know personally many people who have unfortunately been shafted from their involvement in those companies. At the very least, it rips apart communities who get involved with the concept no matter how it is dressed up to look pretty.