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World economy has been like a pyramid scheme

A former economic adviser to Tony Blair has suggested that the world economy has been functioning as a pyramid scam in the style of 1920s’ crook Charles Ponzi.

Europe economics managing consultant Derek Scott told delegates at the BSA conference that the world economy has collapsed, just like the schemes set up by Ponzi.

He said: “When such schemes exist they encourage everyone, lenders and borrowers alike, to believe there are only winners and not losers. When such schemes collapse, borrowers find themselves sitting on worthless assets and lenders start reining in loans as a result.”

Scott said the past decade bears a lot of similarities with the boom of the 1920s and the the bust of the 1930s.

He told delegates that back then, many economists were more insightful than today’s commentators.

He said: “In their analysis of the business cycle, these economists drew attention to the so-called intertemporal problems – too much spending today means less tomorrow.

“Looking around the world, several economies, including the US, are suffering from these type of problems.”

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