Albania emerged from the collapse of communism in the early 1990s and it had little or no controls and experience with capitalism.
With an unaware population and no regulatory checks, the country, according to YouTube channel Rare Earth, saw an explosion of Pyramid schemes where even politicians, government officials and local mafias took part.
As these pyramid schemes competed with each other they started offering even 40 percent returns every month, but the IMF noted that these schemes were being used to funnel money out of the country.
This reached its peak in 1996 where even the Prime Minister’s economic adviser was arrested by the government for trying to warn against this.
The pyramid eventually collapsed in 1997 along with the entire economy of the Albania. For a population of less than three million people 130,000 people lost everything.
There were soon riots and many government offices were burnt, the government lost control of large parts of the country as many people took to the streets and around 2,000 people were killed in the unrest.
The event also set in motion a massive outward population movement of tens of thousands of Albanians which continues to this day.
Bhutan may not be an Albania, but there are similarities in terms of the lack of financial literacy, a largely poor population, weak regulatory checks and constant mushrooming of Pyramid schemes and their growing popularity with even the well educated.
Most of us know of stories where individuals and groups of Bhutanese have been scammed of large amounts of money through these pyramid or Ponzi schemes. Multi Level Marketing is just a modified Ponzi scheme with a product.
What has been the saving grace for Bhutan is that, unlike Albania, our government has taken a clear and public stance against it ever since these schemes started in Bhutan.
However, now with the digital age these schemes have become much more sophisticated and have moved online with access to far larger numbers of people.
This means that not only are the amounts involved much bigger, but they also net a far larger number of people at a much faster rate.
The cult like indoctrination or brainwashing that these schemes do also ensure that even the well educated and aware are netted in these schemes along with their savings and thus end up becoming strong advocates of it.
In the meantime, our regulators and law enforcement have been caught behind the curve as the scam moves much faster than them. The lack of prosecution and strong penalties for those who deliberately propagate such scams from the top have also meant a lack of fear and the repetition of such schemes by local Bhutanese.
These schemes can only be fought if the regulators act fast and strong, if people at the grassroots are aware and if people who have been cheated come out and share their stories.
No Ponzi schemer tells anyone exactly how it works. The purpose of a Ponzi scheme is to trick people, to take the money and run. — Mitchell Zuckoff