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Stats: 2,968,908 members, 7,206,595 topics. Date: Thursday, 08 December 2022 at 03:20 PM
|Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by cosade(m): 5:29pm On Dec 23, 2016|
Let me explain in simple terms why pyramid schemes are not sustainable.
It is neither the media nor government that will stop it, but will stop itself by freezing. Exactly what has happened to MMM in Nigeria
For simplicity, let us assume a world with population of 1 million people and each person holds 100 Naira. The total money in circulation would be N100 million, since there is no production the total money won't increase.
Let's look at a simple pyramid scheme. A participant is expected to "PH" N100, bring in six new participants and "GH" of N600.
This is what would happen.
Level 1 Participant:
The creator (Chuddy) will easily bring in six new participants and collect their N100s. At the end of the day, he ends up with N700. Mind you, he didn't "PHed" to anybody.
Level 2 Participants:
For the 6 participants to fully "GH", they will have to bring 36 new participants into the scheme. They part with their N100s too and the level 2 participants would now be worth N600 each.
The 3rd level participant will now require 216 new participants.
Level 4 will need 1,296 new people.
Level 5 will need 7,776 new people.
Level 6 will need 46,656 new people.
Level 7 will need 279,936 new people.
Level 8 will need 1,679,616 new people.
Level 9 will need 10,077,696 new people.
Now this is the most important thing about pyramid scheme, the freezing point.
In our case study, the scheme can never reach Level 8.
The scheme now requires over 1.6 million people to move on. I hope we still remember that the total population of this imaginary planet is only 1 million. Extra non-available 600,000 people are required to ensure the participants on Level 7 fully "GHed".
It is the point this point that this particular pyramid scheme would freeze.
There is nothing special about Pyramid Scheme such as MMM, Ultimate Cycle etc. It's concept is not rocket science. They are all variants of pyramid scheme. Whenever such scheme reaches it's freezing point, then it can't continue. This what has happened to Nigeria MMM. It is dead QED.
Most MMM participants have argued that many millionaires were created. Only a naive person will say this, because they agreed that the scheme is not involved in any business, so it cannot create wealth.
Looking at the case study above, the total money in that economy cannot be more than N100 million, because there was no production. Any money made by participants meant other participants surrendered their own possession of N100.
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by SmellingAnus(m): 5:32pm On Dec 23, 2016|
Buhari said Nigeria will come out of recession in 2017... My question for you and other nairalanders is that : which of these is more feasible....1. Mmm coming back in January or 2....Nigeria coming out of recession in 2017?
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by cosade(m): 6:10pm On Dec 23, 2016|
There cannot be growth without production (economic activities) therefore, Nigeria won't come out of the recession until we are ready to engage in production. This country is so blessed that we should have no business with recession.
Malaysia came to Nigeria in the 50s to pick palm kernels. Today, Malaysia is the leading producer and exporters of palm oil. Our palm oil plantations are almost not existent.
We have comparative advantage in agriculture and this should be the area Nigeria should closely look at. Thank God some state governments have started the initiatives to increase rice production.
We must produce and reduce importation of goods that we can produce and conserve foreign exchange.
Nigerians must stop being lazy. All these pyramid schemes (MMM, Ultimate Cycle, EGivers etc.) cannot help us but will bring miseries to participants.
Of late, I have started hearing about bitcoins. I must confess that I don't know much about it, but the much I know is that no production is involved. I laugh when I read about generating bitcoins on your personal computers and some greedy people are already putting their money in it. I see these people as lazy and greedy people.
Minting bitcoins with your PC is just like saying the CBN should continue printing naira without the reserve to back it up. Such naira would become worthless papers, so would the bitcoins.
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by SmellingAnus(m): 6:13pm On Dec 23, 2016|
cosade:despite this nice write ups you still didn't answer my question
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by cosade(m): 6:21pm On Dec 23, 2016|
Your question was answered. You should read in between the lines.
MMM can't come back because it is an economic activity (no production). Equally, for Nigeria to come out of recession, we must massively start producing in area of comparative advantage of which agriculture is one.
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by SmellingAnus(m): 6:37pm On Dec 23, 2016|
cosade:it was a simple question that have two options, up till now you still haven't chosen any of the options
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by eph12(m): 6:58pm On Dec 23, 2016|
cosade:The way you guys talk about agriculture like it's one heaven. I have a brother in this agriculture and it's not easy. There are lots of people in it already. You think agriculture is simple? Just get a land and plant abi? Maybe you talking about subsistence agriculture where it's for only you and your family. You can't go commercial without having adequate knowledge. I know of someone who invested in it and lost a lot. Abeg agriculture is not beans jare
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by cosade(m): 7:03pm On Dec 23, 2016|
I am not talking about subsistence farming to get us out of recession but mechanized farming business which should be spare headed by government.
For example, the joint venture between the Lagos and Kebbi State Governments is what I am talking about. Individuals can be organized into groups in farm settlements. There are so many professionals in the Agric Ministries that are not fully engaged. The kind of intervention to get us out of recession has to be driven by the FGN. It's not a child's play.
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by eph12(m): 7:17pm On Dec 23, 2016|
cosade:You should not blame citizens for the failure of the government. When I discuss with people I notice that most have businesses and ideas waiting to be harnessed. But there's no money or the fear of failure is so overwhelming. You know if the business should fail it won't be easy to get back up because life savings, loans have been put into it. The economy is just too volatile to invest if you coming from nothing.
|Re: Why Pyramid Schemes Such As MMM, Ultimate Cycle Etc. Will Always Crash by cosade(m): 7:26pm On Dec 23, 2016|
There was no time I blamed citizens for the failure of government, though we can make our government more accountable.
For example, I expect the organized labour to lead us in taking our politicians to task over the unreasonable salaries and pensions they earn. Government is failing in its responsibilities because a big chunk (75%) of its earnings is spent on recurrent expenditures leaving a paltry percentage (25%) for capital expenditures. We have collectively refused to put a stop to this nonsense.
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