High Yield Invest Programs (HYIP) Are Ponzi Schemes

Are you familiar with HYIPs? If not, that probably means you have found a way not to wade through your spam. Those of us who haven't yet stumbled upon a way to keep our email boxes spam-free, along with those of us who like to dig through the trash to learn about interesting developments know about HYIPs.

HYIP stands for "high yield investment program." Sounds like something your neighborhood financial planner might recommend, doesn't it? "High yield investment program." Hmmm… We all like the idea of high yields, right? The fact that it is an "investment program" lends it some credence, too. Sign me up!

Here's the scoop, kids. High yield investment programs (hereafter referred to by their acronym) are nothing more than well-named Ponzi schemes. There is no investment program, unless you count finding tons of other people to throw their money into the Ponzi an investment.

Here's a disclaimer: There is probably something out there calling itself a "high yield investment program" that is not a mere scam. Such an animal is yet to be spotted, but it may exist out there somewhere in the jungle of the internet.

Here's a breakdown: You put your money into the HYIP. Based on how much more money comes pouring into the HYIP from other financial wizards just like you, you can earn a return on your investment. At some point, you can even try to yank your "earnings" out of the HYIP. If you are very lucky and do this soon enough, you may even actually be paid. Of course, if too many people do that, the HYIP will fall apart that much faster.

Your earnings are not generated by some sort of concrete investment in any sort of real business. They are generated by other people decided to play the Ponzi game. In order to help keep those participation numbers high, many of these HYIPs will also offer you a kickback for anyone else you recruit into the scheme. That helps to keep the Ponzi running.

Eventually, of course, either the folks running the HYIP will decide they have enough dough at their disposal to end the experiment with a fatter wallet or the supply of willing non-MBAs will dwindle to a point where the HYIP is no longer sustainable. It will then collapse. Anyone who didn't get out in time will lose his or her cash.

I know that for many of the folks "investing" in HYIPs, this is not a newsflash. This is the crazy thing about HYIPs - many of the folks tossing money at these half-baked websites know that they are just buying into a Ponzi. Their brilliant plan is to collect enough money before it goes down to turn a profit. Twisted, but far more sensible than actually believing a HYIP is a good idea.

Obviously, the whole thing is so insanely stupid from an investment standpoint that it doesn't really warrant a great deal of consideration. Yes, you might be able to get in and get out fast enough with a fast-growing HYIP to make a few bucks. Neat.

The thing that really gets me about the whole deal is that those who know they are playing a Ponzi game don't seem to give a monkey's tail about the people who are joining in after them, tossing money down the rat-hole. They are willing to try to profit off the ignorance of those thinking they are involved in some sort of legitimate venture. They are trading on naiveté, willing to prosper because someone else decided to play who didn't really realize they were buying air and feeding cash to early adopters and site administrators who plan to shut down once the HYIP makes enough coin.

So, the HYIP is not really an investment. Plus, it ranks pretty low on the ethics scale. Oh, and in most places these "investment programs" are, at least arguably, illegal. Whether you are playing as part of a calculated effort to make money off the ignorance of others or you are in because you didn't stumble upon accurate information about HYIP first, the best advice you can probably take is to get out. Until you do, you are wading about in the gutter of scams and risking your resources in the process.