Many of the older generations would remember the fame Gemini Chit Fund of the 1970s when depositors were promised high returns for their savings. Like all cheat funds, once an institution goes down the road of cheating, its days are numbered. No cheat funds can last for long.
The cheat funds operate on a very simple business formula. Get in as many depositors as possible like the Ponzi game. The fictitious payout can continue from getting more new depositors even if the investments of the collected money are not making good returns. Making lesser returns than the payout is making a loss. And some may wonder if the collected money were actually invested. There is no need to if more new money is flowing in. And in those days the cost of rental and payroll were minimal unlike today.
Cheat funds are limited in what they can do. If they can as they please, cheat funds can really go on in perpetuity as long as the conditions for more funds to flow in is non stopped. Cheat funds would be very pleased if they could keep on increasing their contributing members from 1m to 2m to 5m to 10m and ever increasing. This is the first part of the equation.
Cheat funds could also stop or delay their payouts by encouraging depositors to reinvest their profits ala bucket shop. One sound product is housing. Cheat funds can sell housing in short leases of 30 years or 60 years. The shorter the better as the money invested in these leases will eventually come to zero at the end of the lease even if the property prices could peak at several millions in between. There is an end game in property leases.
Other products that cheat funds can sell to their depositors include insurance for life and medical. In the case of life insurance, they must attempt to convince their customers that their lifespan is forever, or the longer the better. The trick is to keep the money in. And innocent laymen would love to hear that they can live forever, undead, and would need to park more money for their days of being undead.
Medical insurance is also a good product when medical bills are getting more expensive. The cheat funds could even set up their own hospitals and sell their own insurance. It is kind of ‘pau ka liau’ business. And the effect is the same. Every cent collected will be kept inside the vault.
Today, cheat funds could actually operate more effectively and efficiently with more products and schemes to entice and trap the depositors. It is a good and very profitable business as long as there is no run on the fund and the number of depositors keeps on increasing.
Time to revive the Gemini Cheat Fund and calling it any other name will do. A rose is a rose whatever you call it.
12 comments:
(Cheat)Chit Fund are less reliable than Tontine(Huay in Hokkien Dialect).
In any case, Chit and Cheat kind of reflects the reliability of the operator. Must say some were quite good just like some loan sharks are quite okay.
Sounds like a Common Ponzi Fund.
As usual, RB is a deeply perceptive writer.
Think CPF, Medisave, HDB.
I think it is better that I add the following disclaimer.
All characters/terms appearing in this work are fictitious or related to the Gemini Chit Fund. Any resemblance to anything,to real persons, living or dead, is purely coincidental.
Chitzfnd,Tontine,Insoran,see Pee Ep....are less reliable than my own pocket.
Sound very much like our CPF scheme or Cheat Peoples' Fund
We also have today and is call CPF(Can Pay Faster)
All sort of schemes has been devised to use the money and also trap your money in CPF Life and Medical account. With raising Medical, we need to rise the Medical account by $5K every year, now is 40K give it another 20 years you reach 140K and your Minimum Sum will hit $200k and the man in the street will be wondering why CPF Can't Pay Faster. In fact, they will slowly pay until you die!
One fundamental difference between Gemini Chit Fund and CPF -- Gemini was voluntary -- caveat emptor. The majority of S'poreans didn't lose any money, because the majority didn't "play".
CPF? No choice. If you earn a wage, you are forced to play, as is your employer. No escape. caveat emptor -- no point! You are toast from the get-go.
You are also a very perceptive reader! Exactly what it is! Blood suckers! Really langgar! Pochi dah!
Ya! This is the classic CYA - Cover Your Arse just in case you get lawyers' letter. I learnt that long ago in the civil service. Always CYA ! Remember that! Langgar dah!
Hey not seen you for quite some time? Where have u been. We miss u. Looking forward to see u soon.
This is worst than the Nigerian Scam! Langgar terus!
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