I tried to make a Ponzi scheme bitmap diagram, but it ended up just a confusing mess (just like the real thing), and in the end it is more informative to set it out in the simple list form below.
Here's how to make a Ponzi scheme:
1 Scammer asks scammees to lend him money, promising big returns.
2 10 Scammees give say 100 each = 1000.
3 Scammer gives each 10 at end of year, and keeps 900 for his lifestyle.
4 Scammees are pleased with their 10 (believing it to be in addition to the 100 they gave, which is not now the case, as it has gone to support the scammers lifestyle). Scammees are encouraged to recruit further scammees, who repeat 2,3,4, until no further scammees are recruited, or until the original scammees request their money back.
5 The scam works while it is growing. Just like the "growth economy". When growth stops, the scam collapses. Just like the "growth economy", which has to keep growing in order to work.
Which is insane, because it is impossible to expand forever in a finite space.
This shows what happens if a hamster does not stop growing.
Bernie Madoff has been sent down for the rest of his natural life for his Ponzi scheme.
Hyman Minsky was an economist, one of the rare ones who predicted the Credit Crunch. We should therefore listen to him. He said some derivatives were Ponzi schemes.
So the whole orthodox economy, the one we live in, is a gigantic Ponzi scheme. (More here).
Greens have been criticising the doctrine of everlasting growth for 30 years, and for having the temerity to assert that it is impossible to expand forever in a finite space. We have been ridiculed and sidelined as a result. 'Twas ever thus.
The orthodox economy is in fact nothing but a dys-economy. Economics must be based on ecology to be valid.
The lunatics have taken over the asylum, and it is the task of our generation to reinstate ecological wisdom in the place of casino capitalism.
Now that you're here, click on the "Ponzi", or "Solving the financial crisis" labels below, to find how Green economics approaches the triple whammy of problems the world is facing up to in our time: Recession, Peak Oil, and Climate Change.
There's loads of other stuff here that you won't get anywhere else. Make yourself at home. All comments get answered.
Don't believe it is possible to stop economic growth? Read Herman Daly on the Opportunity Cost of growth.