WEBVTT - Part One: Amway: The Gravedigger of Democracy 0:00:03.560 --> 0:00:13.320 What's syphilitic? My eighteen seventies sailors, I'm Robert Evans hosted 0:00:13.320 --> 0:00:16.320 Behind the Bastards. That introduction had really nothing to do 0:00:16.360 --> 0:00:18.880 with the topic today. But I mean, sailors in the 0:00:18.920 --> 0:00:21.480 eighteen seventies had a hell of a lot of syphilis. 0:00:21.480 --> 0:00:24.800 You can't argue that that's just that's just fact, that's 0:00:24.800 --> 0:00:28.040 just science. Here with me to talk about syphilis a 0:00:28.080 --> 0:00:31.760 little bit more is my once and current and probably 0:00:31.840 --> 0:00:37.159 future boss Jack O'Brien. Actually it ends after after this, 0:00:37.560 --> 0:00:44.360 after that one more time over swan song. Yeah, yeah, No, 0:00:45.000 --> 0:00:47.800 pleasure to be here, Pleasure to just be on a 0:00:47.880 --> 0:00:52.280 zoom with both of you, Robert and Sophie. It's good. 0:00:52.360 --> 0:00:56.400 What is more the American way than syphilis? You know? 0:00:56.800 --> 0:00:59.240 It is, it is. It is the most American disease, 0:00:59.440 --> 0:01:02.040 and I think one we ought to bring back. Let's 0:01:02.040 --> 0:01:05.679 bring back everybody slowly losing their minds as worms eat 0:01:05.720 --> 0:01:08.720 their brains. It's good for you. It brought us. There's 0:01:08.720 --> 0:01:11.160 a bunch of art we got because of syphilis. You know, what, 0:01:11.360 --> 0:01:13.160 what are we what are we losing now that we've 0:01:13.200 --> 0:01:16.040 cured it? A lot? Is my contention, We're losing a 0:01:16.040 --> 0:01:19.560 lot and possibly a Hitler too. Yeah, we might be 0:01:19.600 --> 0:01:22.520 losing exactly, we're losing a Hitler or two and maybe, 0:01:22.640 --> 0:01:26.479 uh well, okay, probably has nothing to do with what 0:01:26.520 --> 0:01:32.400 we're talking. It really doesn't. It really doesn't, Um, Jack 0:01:33.480 --> 0:01:37.959 O'Brien attack Jacktoberfest. This is every time I do this. 0:01:38.080 --> 0:01:41.280 I'm continuing a series of jokes that are our colleague 0:01:41.319 --> 0:01:47.720 Dan O'Brien did when I was like seventeen. It's funny 0:01:47.760 --> 0:01:51.360 the things that stick with you, Um, Jack, how do 0:01:51.400 --> 0:01:54.480 you funny? The things that stick with you? Like that 0:01:54.880 --> 0:02:01.240 being a thing that everybody says to me. Also, people 0:02:01.280 --> 0:02:04.760 thinking that I am a fictional character created by Daniel O'Brien, 0:02:05.600 --> 0:02:08.040 aren't you. I did think that right up until you 0:02:08.160 --> 0:02:12.600 called me about the internship when I was I just 0:02:13.000 --> 0:02:15.760 I'm just somebody who saw a branding opportunity and reached 0:02:15.760 --> 0:02:18.040 out to Daniel and said, Hey, I want to occupy 0:02:18.960 --> 0:02:22.160 this character of Jack O'Brien that you invented. We should 0:02:22.160 --> 0:02:25.320 really be nicer to Jack. He employed both of us. 0:02:25.320 --> 0:02:30.240 He's employed me virtually my entire adult life. Jack saved 0:02:30.320 --> 0:02:33.840 me from the tech world. He saved me from very 0:02:34.040 --> 0:02:40.320 lucky and a teacher. Well, you're still still teaching people stuff. 0:02:40.360 --> 0:02:43.080 I would feel more bad about that, but I feel 0:02:43.080 --> 0:02:45.240 like you do a good job teaching people stuff, so 0:02:45.280 --> 0:02:48.920 I appreciate that. Well, Jack, how do you feel about AMI? 0:02:49.520 --> 0:02:52.200 I mean, I don't know a ton about it, and 0:02:52.320 --> 0:02:55.679 that's good. I know it as a like door to 0:02:55.760 --> 0:03:00.480 door sales thing, and I know it as sort of 0:03:00.520 --> 0:03:06.360 the uh grandmother of multi level marketing that which has 0:03:06.440 --> 0:03:12.080 turned into a massive thing. Now, yeah, yeah, that's that's 0:03:12.120 --> 0:03:14.880 the basics, And the most important thing to know about Amway, Jack, 0:03:14.960 --> 0:03:17.440 is that it is not legally a pyramid scheme, as 0:03:17.480 --> 0:03:23.720 in never legally not a pyramid scheme. And the fact 0:03:23.720 --> 0:03:26.560 that we have to say it's legally not a pyramid 0:03:26.639 --> 0:03:29.120 scheme does say all that you should know about the 0:03:29.200 --> 0:03:31.359 kind of business Away is as and it's the kind 0:03:31.360 --> 0:03:34.720 of business where you have to specifically note that legally 0:03:35.080 --> 0:03:38.760 it's not a pyramid scheme. A lot of lawyers. They 0:03:38.800 --> 0:03:40.560 have a lot of lawyers and a lot of money. 0:03:41.440 --> 0:03:43.880 If there's like a mathematical equation you can do based 0:03:43.920 --> 0:03:46.880 on like the the amount of money you have and 0:03:46.880 --> 0:03:50.320 then how much of that money you spend on lawyers 0:03:50.440 --> 0:03:56.240 that just like attack people on your on your behalf. Um. Yeah, uh, 0:03:56.440 --> 0:04:00.720 and so it is. It is not legally a pyramid scheme. Um. 0:04:00.720 --> 0:04:04.160 But the Consumer Awareness Institute has calculated that Amway's loss 0:04:04.280 --> 0:04:09.240 rates for distributors exceed ninety nine point nine percent, which 0:04:09.280 --> 0:04:11.880 means virtually all of the people who are kind of 0:04:11.960 --> 0:04:14.480 sort of employees of a way, of course, legally they're 0:04:14.480 --> 0:04:18.599 not employees. They're independent, you know, distributors, um make zero 0:04:18.640 --> 0:04:21.400 money or lose money. And and nearly all of the 0:04:21.440 --> 0:04:25.240 profits that am Way makes come from its distributors and 0:04:25.279 --> 0:04:27.560 are funneled up to a tiny group of people at 0:04:27.600 --> 0:04:30.479 the top, while the vast majority of people at the 0:04:30.520 --> 0:04:34.200 bottom make nothing. You can visualize the shape of that 0:04:34.279 --> 0:04:42.200 arrangement in your head. But it's legally not a pyramid scheme. Yeah. Yeah, 0:04:42.320 --> 0:04:45.440 Now the ninety nine point nine is not not great. 0:04:45.720 --> 0:04:48.760 It would be a really different podcasting industry if well, 0:04:48.800 --> 0:04:50.560 I guess that is like if you look at podcasting 0:04:50.600 --> 0:04:54.320 as a whole. But that's not you know, a company. Um, 0:04:54.360 --> 0:04:57.200 I'm just saying most podcasts are are are like my 0:04:57.200 --> 0:05:00.520 favorite ever tell you about my favorite podcast? Jack? What's that? 0:05:00.880 --> 0:05:03.160 Oh my god? I came across this before I ever 0:05:03.160 --> 0:05:06.359 gotten to podcasting. But when people started talking about it 0:05:06.360 --> 0:05:10.000 as a thing, I think around and I fell in 0:05:10.040 --> 0:05:12.920 love with it because it was the most tasteless, tactless 0:05:12.960 --> 0:05:15.080 thing I have ever encountered in my life. It was 0:05:15.120 --> 0:05:19.560 a vaping podcast by like four four kind of chetty 0:05:19.640 --> 0:05:22.359 dudes in South Carolina, and the name they picked for 0:05:22.400 --> 0:05:29.800 their podcast was the Serial Vapists. Yeah, they shaped it 0:05:29.880 --> 0:05:33.080 did um and the content was exactly what you'd expect 0:05:33.120 --> 0:05:35.120 it was. It was horrible, but it was very funny. 0:05:35.120 --> 0:05:37.360 I don't think they am fairly certain. They never made 0:05:37.440 --> 0:05:39.440 Joe Rogan bucks off of that show, but it was 0:05:39.560 --> 0:05:41.920 very funny to me. I was really hoping you were 0:05:41.920 --> 0:05:44.160 going to name drop one of your own podcasts that's 0:05:44.200 --> 0:05:47.960 your favorite. Were you were that that guy? No, no, no, 0:05:48.320 --> 0:05:51.240 I don't listen to podcast Sophie, I just make them um. 0:05:51.279 --> 0:05:53.960 I've actually never time to listen in my life. Exactly 0:05:54.080 --> 0:05:58.120 tubiously making that Cassy making them um um. It's like 0:05:58.200 --> 0:06:00.760 Dan Acroyds never seen one of his own movies. You 0:06:00.960 --> 0:06:04.600 know that that can't be possible. Dan was the only 0:06:04.640 --> 0:06:09.600 man who hasn't watched Ghostbusters. Probably watched that one, you'd 0:06:09.600 --> 0:06:11.400 have to think. But he claims he doesn't watch his 0:06:11.440 --> 0:06:15.000 own movies. Yeah, I mean that would be did you 0:06:16.080 --> 0:06:20.960 did you just when you were discovering, uh, the Cereal vapists? 0:06:21.120 --> 0:06:28.000 Did you just put is there like some cereal? It 0:06:28.040 --> 0:06:30.719 was like really cereal and it was whenever whatever. Years 0:06:30.760 --> 0:06:32.840 the first serial came out, So I was looking for 0:06:32.960 --> 0:06:35.360 Cereal and I saw underneath it like and I had 0:06:35.400 --> 0:06:38.760 to listen, um and it was amazing. Like one of 0:06:38.800 --> 0:06:40.760 the episodes, the first like twenty minutes, was just a 0:06:40.800 --> 0:06:43.000 guy talking about taking a ship at a vape store 0:06:43.120 --> 0:06:45.599 and the fact that they were cool with the fact 0:06:45.640 --> 0:06:47.640 that he took a giant ship in their bathroom. Like 0:06:48.040 --> 0:06:51.640 it was an incredible moment in content history. If someone 0:06:51.680 --> 0:06:55.360 can find their old episodes by all means do um. 0:06:55.400 --> 0:06:58.960 It was amazing, So Jack, The first important thing to 0:06:59.000 --> 0:07:01.239 know about Amay is that it's legally not a pyramid scheme. 0:07:01.320 --> 0:07:03.800 The second most important thing to know about am Way 0:07:03.839 --> 0:07:06.200 is the history of pyramid schemes, because once you learn 0:07:06.279 --> 0:07:09.440 the history of pyramid schemes, why am Way isn't legally 0:07:09.520 --> 0:07:12.760 one makes somewhat more sense. Now if you go into 0:07:12.760 --> 0:07:14.840 this line of research, if you google for first ever 0:07:14.880 --> 0:07:17.760 pyramid scheme, you will generally be directed towards the tale 0:07:17.800 --> 0:07:20.440 of Charles Ponzi, who we've discussed a couple of times 0:07:20.440 --> 0:07:22.800 on the show. In brief, he was an immigrant from 0:07:22.840 --> 0:07:26.680 that perfidious peninsula, Italy who in nineteen nineteen hatched a 0:07:26.760 --> 0:07:31.520 scheme involving what we're called international Postal Reply cupons. These 0:07:31.520 --> 0:07:35.680 were essentially stamps that had been created for small international transactions, 0:07:35.720 --> 0:07:38.200 and they were redeemable at post offices in the United 0:07:38.240 --> 0:07:41.280 States for real stamps, which obviously have a cash value. 0:07:41.720 --> 0:07:45.400 Ponzi got one of these international Postal Reply coupons from 0:07:45.400 --> 0:07:47.760 a friend in Italy while he was in Boston, and 0:07:47.800 --> 0:07:49.880 he realized that the coupon he had gotten had been 0:07:49.920 --> 0:07:52.960 purchased in Spain because they were cheapest there um and 0:07:53.080 --> 0:07:55.840 because of basically, to make a long story short, because 0:07:55.840 --> 0:07:57.520 of how much stamps were worth in the US, and 0:07:57.520 --> 0:07:59.600 how cheap these things were to get in Spain, you 0:07:59.600 --> 0:08:02.440 could make a profit just buying these in Spain and 0:08:02.520 --> 0:08:04.680 redeeming them for stamps. It was kind of a loophole 0:08:04.680 --> 0:08:07.840 in the system. So Ponds he hatches this that that 0:08:07.960 --> 0:08:12.560 sounds like basically the most honest way that somebody could 0:08:12.560 --> 0:08:15.360 make a living today. At like a hedge fund or 0:08:15.680 --> 0:08:19.520 like that just sounds like it's every financial job in existence. Well, 0:08:19.800 --> 0:08:22.560 this is not what he actually does, um, but this 0:08:22.640 --> 0:08:25.000 is how he justifed. Like So, his initial plan was 0:08:25.040 --> 0:08:27.000 to do this at a huge scale, like getting a 0:08:27.000 --> 0:08:29.600 bunch of basically giving getting people to give him money 0:08:29.840 --> 0:08:32.880 to use to buy these international coupons that he would 0:08:32.880 --> 0:08:35.000 then redeem for stamps which he would sell for cash 0:08:35.080 --> 0:08:37.840 and then just redistribute the profits. That was the idea 0:08:37.960 --> 0:08:41.120 on paper cover story. Yes, so he founds a company, 0:08:41.600 --> 0:08:44.480 the Security and Exchange Company, which was not He wasn't 0:08:44.480 --> 0:08:46.320 trying to do a thing with the SEC. The SEC 0:08:46.440 --> 0:08:48.360 did not exist at this point, so he just came 0:08:48.440 --> 0:08:50.520 up with the same name they did, which think of 0:08:50.559 --> 0:08:52.959 that what you will. Um. So he comes up with 0:08:53.000 --> 0:08:56.880 the SEC to facilitate this scheme, and he promises a 0:08:57.559 --> 0:09:00.360 return to investors in ninety days, which is obviously bullshit. 0:09:00.400 --> 0:09:03.880 Any what time someone tells you unless it's drugs. If 0:09:03.920 --> 0:09:06.040 someone's telling you that they're gonna if they're gonna do 0:09:06.080 --> 0:09:08.400 that with your drug money, that might be real, but 0:09:08.480 --> 0:09:11.680 you know it's it's drugs. So um. It did well 0:09:11.720 --> 0:09:14.160 for a few months, but Ponzi never really went through 0:09:14.280 --> 0:09:16.719 like he got a bunch of investments, but he never 0:09:16.800 --> 0:09:19.959 did the international cupon thing. Instead, he just lived the 0:09:20.040 --> 0:09:23.520 high life for months, uh and would repay early investors 0:09:23.559 --> 0:09:26.960 with money from new investors, which is obviously an unstable 0:09:27.040 --> 0:09:30.040 situation that can't last forever. And eventually the Boston Post 0:09:30.080 --> 0:09:31.880 found out what he was up to. They wrote a 0:09:31.920 --> 0:09:33.679 bunch of expose a s on it, and the District 0:09:33.760 --> 0:09:36.160 Attorney of Boston got all aggro about the whole thing. 0:09:36.640 --> 0:09:39.160 In the end, Pond Ponzi was arrested and his name 0:09:39.200 --> 0:09:42.200 went on to adore and countless other similar schemes. So 0:09:42.240 --> 0:09:44.440 that's where we get the Ponzi scheme from you like 0:09:44.480 --> 0:09:47.400 Bernie made Off did that and kind of over time, 0:09:47.640 --> 0:09:50.480 the term pyramid scheme became the catch all term to 0:09:50.520 --> 0:09:52.600 refer to a wide variety of cons that were all 0:09:52.640 --> 0:09:55.840 descended from Ponzi scheme. So Ponzi generally seen as like 0:09:55.880 --> 0:09:59.760 the first pyramid scheme, um but all. It's also worth 0:09:59.800 --> 0:10:02.440 note that he wasn't the first pyramid scheme as a 0:10:02.440 --> 0:10:04.240 matter of fact, if you want to look at the 0:10:04.240 --> 0:10:07.920 real originator and maybe the person Ponzi was copying, um 0:10:07.960 --> 0:10:09.760 as best we can tell, it was a woman named 0:10:09.800 --> 0:10:12.520 Sarah How in Boston in eighteen seventy nine. So the 0:10:12.559 --> 0:10:17.160 first pyramid scheme properly may have been the invention of 0:10:16.920 --> 0:10:19.240 a of a lady in Boston in the eighteen seventies. 0:10:19.280 --> 0:10:22.080 She just very rarely gets the credit for this um. 0:10:22.120 --> 0:10:25.240 But but we're all about, you know, giving credit to 0:10:25.240 --> 0:10:27.280 the women grifters, So I'm gonna talk about Sarah How 0:10:27.400 --> 0:10:29.920 for a little bit. She created a con called the 0:10:30.000 --> 0:10:34.439 Ladies Deposit Company, and the Ladies Deposit Company was ostensibly 0:10:34.559 --> 0:10:38.040 a bank run by women, women and exclusively for women. 0:10:38.520 --> 0:10:41.440 In the eighteen seventies, women weren't allowed to have bank 0:10:41.480 --> 0:10:44.480 account open bank accounts on their own, Like if you 0:10:44.559 --> 0:10:46.200 had a bank account as a one was because like 0:10:46.280 --> 0:10:49.000 your husband or your dad had opened one for you, 0:10:49.080 --> 0:10:51.040 and like they were would would have like a co 0:10:51.760 --> 0:10:53.720 you know whatever on it. Um. So it was a 0:10:53.760 --> 0:10:56.240 fairly huge deal that Sarah was creating a bank that 0:10:56.320 --> 0:10:59.920 was like four women and specifically, Sarah's bank only accepted 0:11:00.000 --> 0:11:03.559 deposits from women who were what she called unprotected i e. 0:11:03.760 --> 0:11:06.040 They did not have a male guardian in charge of 0:11:06.080 --> 0:11:08.880 their finances. So this was like a big deal, but 0:11:08.920 --> 0:11:11.800 of course it was. It was a giant scam, right um. 0:11:11.880 --> 0:11:14.720 So Sarah promised that an exchange for investments from these 0:11:14.800 --> 0:11:18.080 unprotected women, she would give them an eight percent interest 0:11:18.679 --> 0:11:21.440 on their like eight percent return on any money they invested. 0:11:21.480 --> 0:11:23.760 So if you deposited a hundred dollars at the end 0:11:23.800 --> 0:11:25.800 of the year, you'd have a hundred nineties six bucks 0:11:25.800 --> 0:11:28.280 in your account. Um. And she was also giving out 0:11:28.280 --> 0:11:30.600 the first three months of interest in advance to women 0:11:30.600 --> 0:11:33.920 who started accounts with her. So even the day that 0:11:33.960 --> 0:11:37.360 would sound like a scheme, right um, And it was 0:11:37.400 --> 0:11:40.880 definitely a scheme back then. Um. So people at the 0:11:40.920 --> 0:11:42.920 time asked how this could work, how the bank could 0:11:42.920 --> 0:11:46.480 possibly profit doing this, and Shara Sarah ashared them it's 0:11:46.480 --> 0:11:48.760 because it was not a for profit endeavor. She claimed 0:11:48.800 --> 0:11:52.280 that her bank was funded by Quaker philanthropists, um, which 0:11:52.320 --> 0:11:54.439 was a lie. Um. But it was a very successful 0:11:54.480 --> 0:11:57.240 con And you can see why she picked this population 0:11:57.280 --> 0:11:59.760 to con The fact that these women are unprotected means 0:11:59.760 --> 0:12:01.760 like were they going to go to right, like they 0:12:01.760 --> 0:12:05.400 don't have like they don't Presumably these are like kind 0:12:05.400 --> 0:12:08.080 of these poor women, right if you're an independent woman, 0:12:08.120 --> 0:12:10.520 you don't have like a man, either a father or 0:12:10.520 --> 0:12:13.520 a husband. You're kind of in the least protected segment 0:12:13.559 --> 0:12:15.880 of society. So she's going after these people in part 0:12:15.960 --> 0:12:18.319 because she she figures they're not going to be able 0:12:18.360 --> 0:12:22.600 to do anything right. Um. And the con is very 0:12:22.640 --> 0:12:24.920 successful because there was a huge need for a bank 0:12:24.960 --> 0:12:27.240 that would actually serve these women. And in short order, 0:12:27.320 --> 0:12:30.080 Sarah gathered between two hundred and fifty thousand and five 0:12:30.160 --> 0:12:34.040 hundred thousand dollars in eighteen seventies money from close to 0:12:34.080 --> 0:12:38.480 a thousand people. Um a local paper. Yeah, she made 0:12:38.520 --> 0:12:40.440 a lot of money off of that. That was millions 0:12:40.440 --> 0:12:44.719 and modern dollars. Was just the first one to get caught. Basically, No, 0:12:44.840 --> 0:12:46.880 she gets caught before him. But she's a woman, so 0:12:47.000 --> 0:12:48.760 they're not going to name it a Sarah scheme. You 0:12:48.800 --> 0:12:53.520 know that literally does seem to be like why um 0:12:53.559 --> 0:12:56.280 so a local Also, I mean Ponzi scheme was larger, 0:12:56.320 --> 0:12:58.640 but Sarah scheme was not small. This is not a 0:12:58.679 --> 0:13:01.320 low level con. You know, you're making a quarter of 0:13:01.320 --> 0:13:03.760 a million dollars or more in the eighteen seventies, you 0:13:03.800 --> 0:13:07.280 have you have pulled off a good scheme. Um, as 0:13:07.320 --> 0:13:11.000 with Ponzi, A local paper exposed this as a scam. 0:13:11.280 --> 0:13:13.160 Sarah had been a fortune teller in the past, so 0:13:13.240 --> 0:13:15.120 that was a big part of like the reporting on 0:13:15.120 --> 0:13:17.200 her that like, this is not a banker, This is 0:13:17.240 --> 0:13:22.040 like a person who you know, told fortunes and stuff. Um, 0:13:22.200 --> 0:13:24.880 I picked all my financial advisors, is making sure that 0:13:24.920 --> 0:13:27.520 they have a background and fortune telling. You could argue 0:13:27.559 --> 0:13:31.599 that that's what any stockbroker is. I mean, yeah, I 0:13:31.760 --> 0:13:34.000 just don't want to admit it. But yeah, there is 0:13:34.040 --> 0:13:36.720 that fun article about how there's that hamster that has 0:13:36.840 --> 0:13:42.679 outperformed the vast majority of humans in the crypto industry, um, 0:13:42.720 --> 0:13:45.480 which I I do love. Um. They even made acute 0:13:45.520 --> 0:13:49.000 little desk um. So yeah, and the the articles also 0:13:49.080 --> 0:13:52.240 exposed that, in addition to having a background that maybe 0:13:52.440 --> 0:13:55.360 was not the most credible basis for a someone who 0:13:55.360 --> 0:13:59.040 founded a bank, she had uh you know, essentially created 0:13:59.440 --> 0:14:02.120 I mean, she didn't create a Ponzi scream. She created 0:14:02.120 --> 0:14:04.400 a house scheme, and Pondsi created a house scheme. But 0:14:04.480 --> 0:14:06.000 I'm going to quote from a write up on long 0:14:06.080 --> 0:14:09.240 Reads here, when a new depositor arrived, how would use 0:14:09.280 --> 0:14:11.319 their money to pay out older clients. So the whole 0:14:11.360 --> 0:14:14.240 scheme required a constant influx of new depositors to pay 0:14:14.240 --> 0:14:16.920 out the old ones. Like every other Ponzi fraudster, House 0:14:16.960 --> 0:14:19.240 Bank would have eventually run out of new money. The 0:14:19.320 --> 0:14:22.320 run of stories in the Boston Daily Advertiser instilled enough 0:14:22.360 --> 0:14:24.480 fear in the banks investors that they began to withdraw 0:14:24.520 --> 0:14:26.880 their money, and eventually there was a run on House Bank. 0:14:27.240 --> 0:14:29.200 It took two weeks in five days from the first 0:14:29.240 --> 0:14:32.360 story published in the Advertiser uncovering house fraud before she 0:14:32.440 --> 0:14:35.680 was arrested. The press extended her victims a modicum of sympathy, 0:14:35.720 --> 0:14:38.160 describing their plights will also reminding the reader that they 0:14:38.200 --> 0:14:40.760 deserved their pain for trusting a woman with their money. 0:14:41.200 --> 0:14:43.200 I put every dollar I had into the bank, and 0:14:43.240 --> 0:14:45.440 if I lose it, I am a beggar. One depositor 0:14:45.520 --> 0:14:47.800 told the Boston Globe at the time. I wanted the 0:14:47.840 --> 0:14:49.920 interest so badly that I placed a mortgage on my 0:14:49.960 --> 0:14:52.920 furniture to secure the principle to deposit. Oh I wish 0:14:52.960 --> 0:14:55.200 I hadn't now, for I shall have my goods sold 0:14:55.280 --> 0:15:01.160 from under my head, said another. Those characters were made 0:15:01.200 --> 0:15:06.760 up by writing that story because they yeah, yeah uh. 0:15:07.280 --> 0:15:13.200 Also to a woman, I'm a journalist. Also, isn't it 0:15:13.280 --> 0:15:16.560 true that women couldn't women couldn't have credit cards until 0:15:16.560 --> 0:15:21.000 like the nineteen seventies, Like yeah, it's like a very 0:15:21.200 --> 0:15:26.200 uh DP entrenched sort of myth about women. Yeah, it's 0:15:26.360 --> 0:15:28.840 um it's it's like there's a lot of fund up 0:15:28.840 --> 0:15:31.600 stuff about like what women were and weren't allowed to, 0:15:31.880 --> 0:15:34.600 uh to do financially, but in the eighteen seventy it 0:15:34.640 --> 0:15:37.800 was basically nothing. So she was going after the most 0:15:37.840 --> 0:15:40.520 desperate people. Um. And it says a lot about society 0:15:40.520 --> 0:15:42.160 that they were just like, well they trusted a woman 0:15:42.200 --> 0:15:44.480 with that money, you know, even though like well they 0:15:44.480 --> 0:15:47.120 weren't allowed to trust a man with their money, like 0:15:47.160 --> 0:15:51.200 they legally couldn't. What were they supposed to do? Um? Right? 0:15:51.560 --> 0:15:53.760 I mean that's also probably why I got picked up. 0:15:53.760 --> 0:15:55.640 And like we still know the story is because it 0:15:55.760 --> 0:16:01.160 like goes to prove a thing that every buddy, all 0:16:01.560 --> 0:16:05.600 the white men in existence wanted to believe. So yeah, 0:16:05.720 --> 0:16:08.680 it's funny, um and by which I mean it's sucked up. 0:16:08.720 --> 0:16:11.800 So and I guess I mean it should be a 0:16:11.800 --> 0:16:14.520 house scheme, we should call them house schemes and fairness, 0:16:14.560 --> 0:16:17.120 but also a Ponzi scheme. Is just a great name. 0:16:17.480 --> 0:16:21.200 Ponzi did have a better name objectively, for for calling 0:16:21.200 --> 0:16:24.320 a scheme. Um, it's funny, it's Italian. We all know 0:16:24.360 --> 0:16:27.360 the Italian scampie trusted. You know, it's just good. So 0:16:27.640 --> 0:16:29.760 Sarah how and Charles Ponzi were the first of what 0:16:29.800 --> 0:16:33.760 would become an American institution. Confidence games of one sort 0:16:33.800 --> 0:16:37.000 or another have existed probably as long as economies have existed. 0:16:37.240 --> 0:16:39.720 One could argue that most states and corporations are just 0:16:39.800 --> 0:16:42.240 confidence games on a very grand scale, but I'm not 0:16:42.280 --> 0:16:45.600 gonna get into that right now. What made the schemes 0:16:45.640 --> 0:16:48.600 that how in Ponzi started different was the fact that 0:16:48.640 --> 0:16:54.360 they were built to masquerade within the facade of reputable institutions, banks, 0:16:54.400 --> 0:16:58.760 and other like financial investment companies. By the late eighteen hundreds, 0:16:58.800 --> 0:17:02.320 capitalism was a very solid concept for most Americans, and 0:17:02.520 --> 0:17:06.040 inequality was soaring. People were enticed by a scam that 0:17:06.119 --> 0:17:09.120 seemed to offer them away out of wage slavery by 0:17:09.160 --> 0:17:11.440 doing what looked on the surface to be the same 0:17:11.480 --> 0:17:13.720 thing that all of the rich people around them were doing. Right, 0:17:13.960 --> 0:17:16.920 They weren't promising anything like new and fantastic. They were saying, hey, 0:17:17.000 --> 0:17:18.879 you know all those bankers are rich because of interest. 0:17:18.960 --> 0:17:20.840 Here's a way you can get interested, you can get 0:17:20.880 --> 0:17:23.080 out and like move up into the middle class and whatnot. 0:17:23.160 --> 0:17:26.159 Right not, this is a you know, fanciful scheme. This 0:17:26.240 --> 0:17:29.360 is an investment in its investment that unlike the other 0:17:29.440 --> 0:17:31.399 investments that you know, the rich people are in, Like, 0:17:31.440 --> 0:17:33.600 I'm letting you win on this, right. We talked about 0:17:33.640 --> 0:17:36.320 this a little bit with a nessarist scheme. Um. It's 0:17:36.320 --> 0:17:39.200 a big part of just saying like, hey, this, if 0:17:39.240 --> 0:17:41.720 you frame your scheme as we're giving regular people a 0:17:41.840 --> 0:17:44.200 chance to do the stuff rich people do all the time, 0:17:44.560 --> 0:17:48.280 that's the best kind of financial scheme because you're building 0:17:48.280 --> 0:17:50.840 it on a basis, well, people know there's some way 0:17:50.880 --> 0:17:53.320 to make money with interest. People know some people get 0:17:53.400 --> 0:17:55.880 rich off of investments. Why couldn't it be me this 0:17:55.920 --> 0:17:59.400 one time? Haven't I worked hard enough? You know? Um? 0:17:59.560 --> 0:18:01.679 And then kids of Bernie made off. He did it 0:18:01.760 --> 0:18:06.720 to the people who were the financial inst which is like, 0:18:06.920 --> 0:18:09.320 wait a second, nobody knows what how any of this 0:18:09.359 --> 0:18:11.760 ship works. And that's why we're you're never going to 0:18:11.840 --> 0:18:14.000 hear about made off on behind the bastards because I 0:18:14.040 --> 0:18:19.200 don't have a problem with ye oh of course, Yeah, yeah, 0:18:19.720 --> 0:18:21.840 avenging angel. I mean, I'm sure he did a lot 0:18:21.840 --> 0:18:24.560 of but like, I don't give a shit. Um, his 0:18:24.720 --> 0:18:29.240 victims were people like whatever. Um. So in Sarah's day, 0:18:29.240 --> 0:18:32.199 for impoverished single women. Um, it's like the thing that 0:18:32.480 --> 0:18:34.879 she was promising this downtrond group of people was like, 0:18:35.119 --> 0:18:37.280 you know that rich people have number one, have bank 0:18:37.320 --> 0:18:40.080 accounts and make interest. I'm going to give you that opportunity. 0:18:40.080 --> 0:18:41.639 So it didn't see these were people weren't making a 0:18:41.680 --> 0:18:44.040 dumb decision. They thought they were getting a chance to 0:18:44.040 --> 0:18:46.199 do the thing that the people who have money have 0:18:46.280 --> 0:18:50.119 been doing forever. In Ponzi's day, investments like the stock 0:18:50.160 --> 0:18:51.920 market was starting to get to be a huge deal 0:18:52.000 --> 0:18:54.159 and and he made people feel like, well now you 0:18:54.200 --> 0:18:57.280 can get in, get in on that thing. Um. Both 0:18:57.320 --> 0:19:00.600 schemes work because most of the targeted people sign tutaneously 0:19:00.720 --> 0:19:03.760 misunderstood the real thing the scams were pretending to be, 0:19:04.119 --> 0:19:07.520 but also knew enough about that real thing to know 0:19:07.640 --> 0:19:10.960 that something like what the scammer was promising was how 0:19:11.000 --> 0:19:13.920 all of the rich people they knew had gotten that way. Um. 0:19:14.160 --> 0:19:17.480 So that's why these things work. Now, the exact origins 0:19:17.480 --> 0:19:20.200 of the term pyramid scheme are unclear, but the term 0:19:20.320 --> 0:19:22.720 certainly seems to have come into widespread use during the 0:19:22.720 --> 0:19:26.600 early nineteen seventies thanks to a scam cosmetics company named 0:19:26.640 --> 0:19:31.760 Holiday Magic Um, which if if you listen to the 0:19:31.760 --> 0:19:34.239 podcast The Dream, which is a very good podcast, they 0:19:34.280 --> 0:19:35.800 go into a lot of detail about this. I'm just 0:19:35.800 --> 0:19:38.880 gonna give you the cliffs notes. So Holiday Magic had 0:19:38.920 --> 0:19:41.800 started in the mid nineteen sixties the project of a 0:19:41.840 --> 0:19:45.439 man named William Penn Patrick, and he old Billy was 0:19:45.480 --> 0:19:47.840 a real character. He had he had had a bunch 0:19:47.840 --> 0:19:50.240 of failed businesses. He apparently came upon he was like 0:19:50.320 --> 0:19:53.959 walking past and smelled like or like solid like cosmetics, 0:19:53.960 --> 0:19:56.680 stacked up in some guy's garage and bought the business 0:19:56.720 --> 0:20:00.520 off of him. It was very like sketchy story. Um. 0:20:01.200 --> 0:20:04.160 William Penn Patrick is a fascinating guy. He unsuccessfully ran 0:20:04.200 --> 0:20:08.879 against Ronald Reagan from the right as governor of California. Um. 0:20:08.880 --> 0:20:11.480 He was a one time vice presidential nominee of a 0:20:11.560 --> 0:20:16.439 party called the California Theocratic Party, which just seems like 0:20:16.560 --> 0:20:19.080 it's straight up fascism. And of course he was a 0:20:19.119 --> 0:20:23.919 member of the John Birch Society. So yeah, you know 0:20:24.040 --> 0:20:27.040 this guy. Right, everybody's got a picture of William Penn 0:20:27.119 --> 0:20:31.360 Patrick in their hair in their head. Now, Holiday Magic 0:20:31.840 --> 0:20:35.199 sounds like a like a name you would give to 0:20:35.320 --> 0:20:43.879 actual snake oil, like that you would run that, you yeah, 0:20:43.880 --> 0:20:46.720 Whereas like we're I feel like we're learning the importance 0:20:46.760 --> 0:20:50.560 of names because like with Ponzi and uh am Way, 0:20:50.840 --> 0:20:55.399 sounds like you know that they build fucking trucks or something. 0:20:55.560 --> 0:21:01.560 You know, like it's like yeah, yeah exactly, or or 0:21:01.600 --> 0:21:04.840 at the very least like a place to buy sturdy 0:21:04.920 --> 0:21:10.520 groceries or something like that. You know. Um So, Holiday 0:21:10.600 --> 0:21:13.440 Magic was a multi level marketing company. It was not 0:21:13.520 --> 0:21:16.760 the first. In fact, by the time William Pennpatrick started it, 0:21:16.840 --> 0:21:19.080 there was Avon, am Way, Mary Kay, a bunch of 0:21:19.080 --> 0:21:22.359 other MLMs existed. We'll talk about what maybe the first 0:21:22.480 --> 0:21:26.080 was in a little bit, but Holiday Magic was probably 0:21:26.119 --> 0:21:28.880 was within the first generation of such companies, and it 0:21:28.920 --> 0:21:33.120 was by far the scammiest. The basic idea behind Holiday 0:21:33.119 --> 0:21:36.040