invest money with him for a significant return. Ponzi schemes are highly
pernicious (which is why they’re illegal)—periodically, the country is in-
undated with a new version, such as pyramid investment clubs.^3 Ponzi
paid early investors with the funds from investors who anted up later,
creating the impression that his investors were prospering—at least, the
early ones. The last ones to invest were left holding the bag, as it is impos-
sible to continue paying profits to investors by this method unless later
investors are found—and, eventually we run out of later investors. Every-
where, that is, but in Ponzylvania.
B.P. (Before Ponzi), Ponzylvania was a densely populated country that
had incurred overwhelming debt. Its inhabitants, like the rooms in
Hilbert’s Hotel, are infinite in number—we’ll call them I1, I2, I3,.... Every tenth inhabitant (I10, I20,... ) has a net worth of $1, while all
the others are $1 in debt. The total assets of inhabitants 1 through 10 is
therefore minus $9, as are the total assets of inhabitants 11 through 20, 21
through 30, and so on. Every group of 10 successively numbered inhabit-
ants has negative total assets.
Not to worry; all that is needed is a good way of rearranging assets, so
enter Charles Ponzi—a criminal in the United States, but a national hero
in Ponzylvania. He collects a dollar from I10 and a dollar from I20, giving
them to I1, who now has a net worth of $1. He then collects a dollar from
I30 and a dollar from I40, giving them to I2, who also now has a net worth
of $1. He then collects a dollar from I50 and a dollar from I60, giving them
to I3, who also now has a net worth of $1. We’ll assume that when he comes
to an inhabitant such as I10, who is now f lat broke (he originally had a dol-
lar, but it was given to I1 early on), he simply transfers a dollar from the
next untapped dollar owner. He continues this process until he has gone
through all the inhabitants—at the end of which everyone has $1!
You don’t become a national hero by giving everyone assets of a dollar—
so Ponzi embarks upon Stage 2 of his master financial plan. Since every-
one has a dollar, he collects the dollars from I2, I4, I6, I8,... and gives
them to I1. I1, now infinitely wealthy, retires to his seaside villa. This
process leaves I3, I5, I7, I9,... with $1 each. The key point here is that
there are still infinitely many inhabitants, each of whom has a dollar.
Ponzi now collects the dollars from I3, I7, I11, I15 (every other odd
number),... and gives them to I2, who also retires to his seaside villa. At
this juncture, there are still infinitely many inhabitants who have a dollar
(I5, I9, I13,... ), so Ponzi collects a dollar from every other dollar-owning
inhabitant (I5, I13, I21,... ) and gives them to I3. At the end of this proc-
ess, I3 retires to his seaside villa, and there are still infinitely many inhab-
itants who have a dollar. At the end of Stage 2, everyone is enjoying life on
The Mea sure of All Things 17