12DailyPro Investigation III
A review of the 12DailyPro search results for "12DailyPro Investigation" is revealing.
Many people appear to be angry with Stormpay, whom it is said contributed to 12DailyPro's inability to pay out its members. Some individuals claim that Stormpay is bankrupt.
I do not know whether this is factual or not, but it is worthwhile to recall what Mr. Ponzi's banking arrangements were in the early 1900's. His company, Securities Exchange, a delightful bit of ironic foreshadowing, took and deposited its "investors" funds at three or four local banks. The local American banks at the time often faced credit runs.
Here is a highly simplified examaple: If a Bank's deposits are $100, and it has a reserve of $10, then it can lend up to $90 - generally for long term and less liquid loans, which provide the Bank with more interest than they have to pay out on the $100. A credit run occurs when people believe, rightly or wrongly, that the Bank is not solvent. The bank's creditors, ie those who have bank accounts, start demanding their money back. The Bank can pay them by using its reserves, but if the demand is too great, the Bank will have to liquidate its loans to obtain cash. If it has to liquidate too many of its assets quickly, then like any firesale the price the Bank gets may be less than $100. The account holders sense this desperation and demand even more money, quicker.
What has a Bank run got to do with a Ponzi Scheme?
