Ginko Financial doing exactly what they said they'd do

You can "Caveat Emptor" until the cows come home, but you have to understand the seductive power of the Ponzi Scheme.

People are getting paid interest so they recommend to others, add the fact that we can all ALT it up in SL, and there is massive opportunity for shilling.

I mean, for crying out low, does this mean I can implement a pyramid scheme in SL now? Cause I can tell you, a pyramid scheme is far far more honest and respectable than a "very high risk anonymous investment that pays daily interest".

Yeah, sorry, had the 265 and 250 mixed in my head. But the effect of having Ls removed from SL would increase the value of Ls.

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Linden Labs has been cutting stipend bonuses in an effort to curb inflation caused by stipends. Stipends are paid by money "created" by Linden Labs, with the possible exception of the "recycled" linden dollars from content uploads/rating fees. These alone do not cover what Linden Labs is paying weekly, and residents are not "taxed" to live in-world. Therefore, they must create L$ to pay weekly stipends. Creating money in an economy without destroying the same amount leads to inflation. Selling currency leads to a temporary market dip as the supply may equal, or exceed the demand for a brief period.



More people will want to keep a hold on their L$ in hopes that the value will go up in the future. This causes scarcity in the currency market, and drives the value up once again.



True, however, Linden Labs is more responsible for inflation than any one person selling their Linden Dollars. They're taking steps to correct this, hence cut in stipends. The economy hasn't yet collapsed, and thus far, is in no danger of doing so. There is no need to start screaming about economic collapses until there is a danger of one in the forseeable future.



you're assuming that people aren't as intelligent as you, and don't understand what you call "the seductive power of the Ponzi Scheme."

I'm wondering who appointed you as the "Second Life Head of Financial Education" and charged you with pounding things into people's head, and implying that they are idiots for investing in something that YOU are convinced is a scam.

Caveat Emptor is the concept of "buyer beware." I always do my homework before giving large sums of money to anyone for any purpose. I would expect everyone else to do the same. How about assuming people know what they're up against, rather than assuming we don't know what we're talking about, and need to be baby-sat. Better yet, don't assume anything: when you assume somethng, you make an "ass u me," or an "ass of you and me."

I sincerely hope that people are looking at your user title, and taking your posts with the fact that you're only "1/2 serious" in mind.

CCC

Ya, and so what if it's enticing? Anyone who has a checking account knows that an investment with the type of return Ginko is offering is, at very least, suspicious.

Beyond that, because they are not required by LL to disclose what they are doing with the investments, this is all a big guessing game - unless I missed a post where it details exactly how they are making those types of returns.

Well, actually, maybe.

It might be argued in a court of law that L$ are not "real" currency, and thus are not under the durisdiction of the US court system.

But then it might be countered that L$ are "real property", and that defrauding anyone out of real property is a criminal offense.

At which point, CompanyX might be asked by that court of law how they acquired said L$ and what specific method of acquisition they used.

And the prosecuting attorney would pull one more ace out of his sleeve that I'm not going to reveal here, because it's good for people to know that there are aces to be pulled out of sleeves.. devastating ones.

So yeah, just maybe CompanyX is required by law to have disclosed up front their investment plan... because you don't want to get to court and have the court decide it was a scheme.

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Chill out hero.

This is what I mean by "unknown multiplier". I don't think we can presume that the exchange rate will drop so as to achieve the one-for-one effect you describe. It might be more, it might be less. Or is there a fundamental principle at work here, do you think? I doubt it, at least in the shorter term.

What?

LOL!

Sorry Tren, I apparently quoted the wrong person.

Fixed.

I agree, so long as LL is firmly based in California, where Ponzi's are illegal. In my opinion a Ponzi through SL would be seen there as a crime, despite the "virtual currency" disclaimers. It would have to be argued, but I have little doubt that the authorities might well at least decide a police investigation to be well justified on the balance of the probabilities as we now see them. To determine the facts, and whether wrongdoing is or is not involved. I would be very surprised, furthermore, if some anti-money-laundering regulations had not been bypassed, if these funds really are currently in South America.

Though if this is a scam, I would expect that location to be a red-herring. Could be anywhere.

I say again, even if this one just might in fact be honest, then the next one may not be if we keep on begging to be scammed so unashamedly.

What was the exit route for these funds, anyway ? GOM ? IGE ? Are GOM maintaining records for possible police scrutiny, I wonder ? I hope they don't find they have committed some sort of offence.

Such an investigation could very easily get very unpleasant for a lot of people. Even if Ginko were finally cleared of the Ponzi suspicion, much collateral damage could result, to them and others.

It's not enough to be honest. We need to be seen to be honest. In this, at least, Ginko are failing badly, and defiantly.

I think this might be happening at the margin though. If the economy is finely balanced and then something like this comes along.. I can see it having these types of dramatic effects.

Many of us, opposing views or otherwise, have already spoken in accordance with what we feel to be our 'moral duty'.



It is plain that Ginko is relatively impervious to forum debates.

Unless *very* carefully orchestrated, the Ginko cash balance would have fluctuated significantly if the discussion had any impact.

So... there's strong evidence that raising doubt in the forum is ineffectual.



Only when it starts to take 'too long' for withdrawals to process from Ginko would fear spread. Unlike logic, such fear has 'legs', and is able to propagate throughout a community in a matter of days, or even hours.



If there is a discussion of business theory or some such I am more than willing to chime in.

Other than that - I'm going to enjoy a part of Second Life that has less smoke in the air.

- Desmond Shang

because if this was true, we would all be able to do the following:

take the sum total of our RL assets, and invest them, for the sake of argument, lets assume that all the money 'you' have in this world is a nice round number, say $100,000 us

so you take this money, and invest it, with this 0.14% compounded daily interest.

that sounds like a great idea, they'd pay you $140 us a day, forever!... but wait.. that doesn't take into effect the 'compounding' nature of interest... in actuality they would pay you far far *FAR* more... lets take a look here shall we

at 0.14% compounded per day, your annual take on investment X would be X times 1.0014^365 (the interest rate compounded on itself 365 times).

now i'll stop right here for a second... realize now, that compounding interest, like this, is going to be all calculated via exponents, and if that doesn't immediately make your blood run cold, with these numbers, (assuming you have 'invested' with them) it should...

1.0014^365 gives you the figure 1.666361710798

this means that your investment of $100,000 is going to be worth approximately 166,636 this day, next year... that sounds great right? $66,000 per year yer making!

but thats not even the *really* scary part yet you see, because its *NOT* going to just be $66,000 per year... this interest is going to continue compounding over and over itself...

and heres the part where i am going to 'scare' people as it were.... if this *IS* completely legitimate, and all of these various systems/people are still here and still running strong in 30 years (say that time because thats the average term for a mortgage, another interest calculation we are often familiar with)...

you have to take our initial calculation, of that 1.66 multiple, and exponent that, so its 1.666361710798^30... thats the real 'return' on your investment... lets follow that math along now shall we...

1.66361710798^30 = 4,498,609.94132531

yes, thats right, over 30 years, you have a FOUR MILLION times return on investment... well assuming of course, that you can collect...

based on our initial 'investment' of $100,000 us into this system (since its obviously a good/reliable investment)... you would be owed, by these people, $449,860,994,132.531

yup, thats right, we can ALL be as rich as bill gates... just invest yer $100,000 assets here today, and in a measly 30 years you can retire with just about 450 BILLION dollars, us

now, if you REALLY believe that in 2035 these people will be here, and will be happy to hand over 'your' 450 billion bucks... please, by all means, invest it all..

if you don't... stay the hell away, because this is going to end very *VERY* badly

So, since this has been done before, many times, here is a link to a post, saying much the same thing about the math, and the things to dispute it in the whole thread after, and I mean right to the very end where it finally got locked.

/130/7e/71981/14.html#post752886

/130/7e/71981/14.html

Not many people can seem to let it sink in, that the rate is not going to stay so high.

But, us being adults, and making the choices we have, we understand the risks that have been outlined to us when we made accounts with Ginko.

Enough of that anyway, I keep saying the same things over and over posted in the forums, and nothing new coming out of all of this, I tire of reading, and shall try my best to finally just stop paying attention to this, I know what I am doing with my money, and that is good enough for me, I know the risks.

I am amazed what people are willing to believe on blind faith.

Listen. Do any of you know how banks work, and why they pay interest?

They pay interest because they believe that with the money they borrow from you, they can make MORE than they will pay out in other guaranteed investments.

If a bank knows it can make 4% on government treasury bonds, they will pay customers 3.5%, netting a 0.5% profit. Bank margins are very slim.

The definition of a "ponzi scheme" is taking from one depositor to pay the interest on another depositor's money. That is the VERY DEFINITION.

So, only one of three things must be happening here.

A) Ginko has the ability to make GREATER than 66% interest, guaranteed, somewhere else. If so, then why doesn't he just invest in that with his own cash, since obviously none of us know about it -- instead of having to pay out most of it and make a slim profit?

B) He is borrowing from one to pay another - an illegal ponzi scheme.

C) He is a great, benevolent philanthropist.

For all the sensless and substanceless prosaic posts in here, I amazed what people will do in the face of greed.

Honestly, which of the three do you really think it is?

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In the Real World investment firms are regulated and have to publish reams of information on their activities. In Second Life there are no regulations and no information. Ginko tells their investors that they can lose everything they invest. Ginko says that's all the information the investors need. It's like telling some one they can be struck by lightening, but not telling them if they're standing in an open field during a thunderstorm or in a gully on a sunny day.

And that's okay in Second Life. There are also no laws in Second Life against slandering, discrediting or demeaning an enterprise. You can't do it to a person, but there's nothing saying you can't do it to a business. Welcome to the wide open world of Second Life. The same lack of regulation applies both ways. Ginko's investors can't sue in Second Life if things go pear-shaped, and Ginko can't sue it's detractors for defamation either.

In Second Life it's all about your reputation. If Ginko insists on not releasing any information on how they can pay such astronomical interest rates, that's their right. If other residents say it looks like a ponzi scheme to them, that's their right. Look at the people involved and decide who you want to trust. Whose reputation do you trust?

But the idea that a Second Life business is some how protected against negative comments by individuals, but that same business can't itself be regulated is just silly. It's one way or the other here. Welcome to the Digital World.

It might be "legal in Second Life", but legality aside, you have to realize that it has NEVER WORKED in the history of man, EVER.

Such a scheme REQUIRES that something be made out of nothing. The only answer to that is rapid inflation, which negates the gains - or, someone gets burned.

Disclosures be damned, as well as popularity and growth of SL, Ginko will find (much sooner than later), that their client growth rate will slow, and eventually perhaps stall. They will have to lower their rates - even slightly so - and therefore they will begin to lose customers. They will not be able to afford to raise rates to get those customers back.

So, more customers leave. Rates go down. More customers leave. Rates go down more. If they find a way to leave rates at an extremely high point, the only cause will be due to an influx of monetary supply -- numerically (by inflation), or by some freak influx of new members bringing in money which previously was outside the system.. (which would be equivalent to foreign trade in the "real" US economy.)

Stasis will be found at a sustainable rate; which in the course of human history has never been more than 3-7% during normal inflationary periods, or 15-20% at periods of hyperinflation.

On one part of the scale you have basic inflation, on the other you have rates. Between the two is risk and opportunity cost.

You can talk all the hypotheses you want, but you just can't tweak out one of these and ignore the others.

This issue will correct itself, by itself, in a very short time. And (ha) you can take THAT to the bank.

Now that's just a load of crap.

In the Real World an investment firm has:
1) An address
2) The officers and employees have real names
3) The business is licensed and regulated
4) The business publishes quarterly reports that have to be audited by outsiders
5) Taxes are paid

And those are just the standards that I can think of off the top of my head. No one is holding Ginko to those standards. No one is holding Ginko to any standard at all. Just telling some one that they can lose the money they invest isn't disclosure. It's a fact of any investment. It's like saying, it could rain.

Exactly.

Sure, I could lose all my money by investing in a mutual fund, say Fidelity Magellan. But I realize that they are regulated, require full disclosure, and I am taking what's called a mitigated risk - that is, I feel the risk is reasonable for the potential reward.

With Ginko, the risk is practically unknown and unmitigated. I have NO IDEA what Ginko's doing with the money, and they basically just say "hey, trust us." Heck, they don't even say that. In reality, customers could demand that the risk premium be MUCH HIGHER, since we have no idea what kind of diligence is being done by Ginko in management, or how they intend to make money for us.

(That is how investments work, by the way. Fund managers, etc, work to make money FOR investors. They make money simply as a side effect and consequence.)

Sharky lending and borrowing has happened since time began, and there are reasons why the rules we have about money today date back to freaking ancient Rome!.

An honest person will not promise something that he doesn't think he can deliver. If the person is honest, and thinks he can deliver something unreasonable, he is then incompetent. Investment regulation laws are there to protect the uninformed and the, er, suckers.

Whenever someone offers you a way to "get rich quick", you need to think "If it's so easy, why isn't everyone else doing this? If not, it must be hard - and if so - is this person VERY, VERY SMART?" If you can't answer either of those questions, STAY AWAY.

But that's ok though. Continue to believe. The only way to learn is through your own cackups.

In the original Ginko thread, the supporters of Ginko repeatedly made naive, uneducated, and, yes, some one needs to say it, stupid comments.

Here's a few of them:








Just to clear these up, risky investments do not mean that the returns are greater, only that they're risky. Your bank does publish in detail their investment information. And even private companies that have investors have to let their investors know what is happening with the company.

But its like this. There are risk. We tell everyone that there are risks. Its even on the note cards on the atms. We aren't forcing anyone to do anything, and if they wish, they can withdraw their money and head home or what ever. No amount of debate on what ifs is going to change that. I can promise you that we won't pick up and run, and if you don't believe me, then thats fine. There isn't a darn thing I can do about that.

And about an earlier post, no, Ginko Bank won't be around in the 2023, and its silly to think it will be around forever. But if ginko bank does at some point shut down, prior notice will be sent out, and all your invested money will be returned to you. Once agian, this is a trust thing, and if you can't take my word for it, don't invest.