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Phoenix: China’s Central Bank Is the Root Cause of Financial Ponzi Schemes

Frequent reports about Ponzi schemes have been appearing on China’s online P2P (person to person) financial management web sites. Those online platforms offer financial products with high returns to attract investments but in the end they have turned out just to be Ponzi schemes.

Phoenix published an article commenting on how widespread such schemes are. The article pointed out that the root cause is that China’s Central Bank keeps printing Renminbi, causing a drastic devaluation of the money. The public, in order to protect the wealth they accumulated in Renminbi and to counter the devaluation factor, has had no choice but to look for investment options that promised high returns. 

"According to Xinhuain December 2015, the m2 money supply increased by 13.3 percent over what it had been a year ago." "It means that today, the actual buying power of what was previously 100 yuan, with 2 percent interest, and with subtracting the 13.3 percent, ended up being less than 90 yuan."

Source: Phoenix, April 12, 2016