Interesting math that reveals some of the actual facts and figures of a pyramid scheme collapse. (Table data sourced from Consumers’ Association of Penang)
Let’s dissect the table above.
1) As you can see on the 10th level, the amount contributed by the members is equivalent to the commission paid out.
2) Needless to say, at the 11th level, the company would not have enough cash to reimburse new members, and this is the point where the pyramid cracks and collapse. Though it could happen way before the 11th layer due to factors such as members bailing out and when members start asking for return of their “investment”.
3) Notice also if you continue to increase the number of members until the 21st layer, you should have the entire Earth’s population under your belt, which I can assure is absurd, but nobody in the scheme is going to tell you this calculation.
4) Also, there are companies that device various formulas to slow down the collapse, such as delaying the commission paid out to the 4th layer onwards or design various conditions where the new recruits will need to fulfil before their commission kicks in. These are just steps to slow down the collapse, so in short- it’s still going to collapse!
5) When you are in such schemes, there’s virtually no way to find out which level you are in. You can try asking that question in one of those motivational talks held by such pyramid-schemed companies. I am not sure what reply you are going to get, but I am sure it’s not going to be favourable.
Nope, the aliens did not invent this pyramid. I guess they never thought human beings would fell for it. :-P
There’s absolutely no wealth or value created in a pyramid scheme, the wealth is the same before and after the system is established. There’s only a transfer of wealth from the top to bottom, where the top gained and bottom losses.
I hope that the table above can answer some of your questions on the validity of a pyramid-schemed business model.
Have you ever been gulled?
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