Bernie Madoff's Ponzi Scheme Really Wasn't That Bad - How Money Works

-----

Bernie Madoff ran the largest Ponzi scheme in history, which at it’s height had an apparent 65 billion dollars in assets under management made up of investments by everybody from wall street billionaires to pension funds.

This all came crashing down in December of 2008, as the fraudulent businessman was arrested and subsequently charged to face over 100 years in prison, a sentence that he served up until his death last month.

But here is the thing, Bernie's fraud, was… not…that… bad…

In fact there is arguably more damaging behaviors taking place in the markets day in and day out today by some of the most revered businessmen in the world.

To understand this, it’s time to learn how money works by defending the indefensible and really understanding how Bernie Madoff ran his business.

So the basic function of a Ponzi scheme is that a legitimate looking operation is set up to attract investors looking to make a nice healthy return. Now this operation could theoretically purport to do anything…. shipping, mining, manufacturing, but more often than not it is investing.

Why investing?

Because it is the most discrete… you see you will never actually perform any of the tasks that you claim you will to the investors and an investment firm doing nothing looks pretty much identical to an investment firm doing a lot, at least from the outside.

#BernieDidNothingWrong #Finance #HowMoneyWorks

[denniss]

If Madoff had kept his scam going a few more months he could had gotten a government bailout

[legatemichael]

Unfortunately you are not considering the cost of opportunity lost. If after 8 years I get 80% of my money back then that may not seem like a great loss, however, if you consider that I have lost 8 years of time and potential growth of my money, then the costs are greater.

[tinamoul]

Madoff made the one single mistake, he stole from rich people.

[steak]

"What is the difference between Bernie Sander and Bernie Madoff? Only one of them manage to tax some rich people."
Omg, I died laughing...

[Dan-ufvh]

Exactly! It was a huge scandal in great part due to the high status of his investors. The poor would not complain nearly as loudly.

[tompoore]

“An investment firm doing nothing looks pretty much identical to an investment firm doing a lot.” This comment should draw more attention than it does. It describes much of what passes for work in the financial industry.

[rilav]

I disagree. If you invest $1, 000 for retirement for example. Ten or twenty years later, with interest you think you have $3, 000. You lost that amount. Mainly because you lost the opportunity, and the time that it takes, to make the roi. If that would happen to me that’s how i would see it awyways.

[HowMoneyWorks]

What’s the difference between Bernie Sanders and Bernie Madoff?







Only one of them could properly tax some rich people.

[vojtechstrnad]

The difference between Bernie and Elon is that those who haven't sold at a loss after the crypto crash will probably still break even in a while, even if it takes a few years for the market to go up again, as it always has. (You might be surprised, but no, this isn't a scammer comment.)

[zodiacfml]

Series titled: Not as Bad. In other words, he is stealing mostly from the rich but still bad for any economy as the money could have been used to grow new/old companies.

[rexmundi]

Wouldnt you have to benchmark the losses vs S&P or something? Or at least against the cost of inflation. Since there is an opportunity cost to no investing in something else?

[seneca]

The losses suffered should include some estimate of the profits the investors could have gotten with a real investment. Of course, that's still less than the $65 billion calculated with the fictional 12% return but it should be more than just the $17 billion put in.

[gamble]

My Father's investment manager invested in Madoff funds and my dad lost around half of his savings. Around 10-15 years after the fact he was made whole, pretty sure if he was made whole pretty much everyone else must have been as well.

[MastaMan]

madoff was probably the CLEANEST person in wall st.

[gingfulglider]

This was a new perspective on this event, nice video!

[dakotastwits]

The first few lines and then throwing up elon was cringe as fuck.

Musk has helped build three multi-billion dollar companies, two are public, and all are highly profitable.

[SebastianTheGreat]

Madoff’s main fatal mistake: Incurring the wrath of powerful people on Wall Street

[bunnerkins]

10k becomes a lot of money when it's everything you own.

[benjaminbialy]

it should probably also be noted that the GFC caused over a 38% drop in 2008 in the s&p, whereas bernie cost the investors 20% and some opportunity cost for the years they were invested. wouldn’t be surprised if he actually saved some people money

[nickv]

"Bernie, what trades are you making for me today"? "I'll tell you in two days".