Russian President Vladimir Putin signed a law aimed at countering financial pyramids. Invest-Foresight talked to Boris Kheifets, chief researcher at the Institute of Economics of the Russian Academy of Sciences, about how not to fall into a trap of scammers today.
– The law allows attracting investments from citizens only to organizations supervised by the Central Bank – these are banks, financial, insurance companies, and so on. Do you think the Central Bank also has the strength to control this field?
– The policy of huge rates, in my opinion, is a policy that, among other things, pushes some citizens with a penchant for risk into the arms of financial pyramids.
As for control, there is no definite answer. In addition, our citizens already lose a lot of money, albeit without investing in financial pyramids, but at the same time they are eaten by the same inflation in particular, and monetary policy in general.
– In general, financial pyramids can be exterminated as a class?
– In this case, I can ask a counter question: is it possible to eradicate the passion for profit? Karl Marx in the first volume of Capital said that there is no crime that a capitalist would not commit for the sake of 300 percent of the profit. If we talk about financial pyramids, then for a person prone to risk, one way or another, the lack of logical brakes will work, and he will take such an adventure.
– At the same time, some also manage to earn money…
– Yes, I personally know people who managed to make money on the same MMM scheme (in 1990-s – Ed.) and were lucky to get out of the pyramid on time. Yes, there is some element of self-defense associated with the moment “quickly go in and quickly go out”. But it is still insufficient, because it is a very unreliable means of accumulation and investment.
– What should an investor do in order not to fall into a trap of fraudsters – creators of financial pyramids?
– The first and main feature of the financial pyramid is that it offers the investor a quick enrichment, advertising a percentage of profitability, which is more not just than rate offered by banks, but also more than interest offered by other financial institutions. But on the other hand, how can you protect yourself from greed?
– Is it possible or unrealistic to ban financial pyramids legally?
– As far as I remember, we banned the pyramids just after the MMM situation. At the same time, fraudsters still always find loopholes that allow them to somehow create similar structures for taking money from the population. New ways are emerging…
– What do you mean, for example?
– Let us consider the same cryptocurrency mining, which has become popular in recent years. In fact, this is the same pyramid, only in a different form. Moreover, no guarantees of profitability are given during mining, while quite serious financial resources are initially required when entering mining.
Although, of course, in the case of mining there is one nuance associated with the need to have a sufficiently large amount of very specific skills and knowledge.