They consist of
"pumping" the price of an asset or an asset class.
The assets concerned can be shares, currencies, other securities and
financial instruments - or even savings accounts. To promise
unearthly yields on one's savings is to artificially inflate the
"price", or the "value" of one's savings account.
More than one fifth of the population of 1983 Israel were involved
in a banking scandal of Albanian proportions. It was a classic
pyramid scheme. All the banks, bar one, promised to gullible
investors ever increasing returns on the banks' own publicly-traded
shares.
These explicit and incredible promises were included in prospectuses
of the banks' public offerings and won the implicit acquiescence and
collaboration of successive Israeli governments. The banks used
deposits, their capital, retained earnings and funds illegally
borrowed through shady offshore subsidiaries to try to keep their
impossible and unhealthy promises. Everyone knew what was going on
and everyone was involved. It lasted 7 years. The prices of some
shares increased by 1-2 percent daily.
On October 6, 1983, the entire banking sector of Israel crumbled.
Faced with ominously mounting civil unrest, the government was
forced to compensate shareholders. It offered them an elaborate
share buyback plan over 9 years.
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