7 Financial Scams, Bubbles, and Boondoggles That Are Definitely Nothing Like Cryptocurrency and NFTs

The story of Albanias civil war is flat wild. Albania was an isolated European communist dictatorship from 1945 until 1991. When the yoke of oppression finally lifted, its desperately poor citizens were unfamiliar with the intricacies of a market economy. But they got schooled pretty quick.

Albanias state banks paid a reasonable amount of interest on deposits, but credit was tough for them to extend. Citizens began to take advantage of unofficial lending institutions, which led to these firms taking investments too. The returns were amazing, so Albanias started flocking to turn over their cash and get rich, selling their houses, cattle, farms, and everything else that wasnt nailed down to buy into Albanias future. It looked like it was working, too. The investment companies started building hotels, shopping centers, and other businesses (and engaging in smuggling and other crimes), and Albania thrived. Before long, almost all Albanians had bought inin 1996, two-thirds of the countrys citizens had money invested with private financial companies.

But heres the problem: It turns out those great returns consisted of money from newer investors, and once you extend a pyramid scheme as far as it is logically possible to golike to 2/two-thirds of an entire countryyou run out of suckers. The house of cards started collapsing in January 1997 when runs on the fake banks revealed there just wasnt any money there.

To say this destabilized the country is an understatement. The people took to the streets in droves. Within a few months, the prime minister resigned. Civil order broke down. Anarchy reigned. Criminal gangs took over large parts of the country.King Leka I, a member of the royal family who had been exiled since 1939, returned from Australia and declared himself king. Thieves stole the contents of the Albanian national treasury. Welcome to capitalism, Albania!

Then a trio of unlikely heroes emerged to save the day. No, not The Powerpuff Girlsthe United Nations, the International Monetary Fund, and the World Bank. A UN-led multinational peacekeeping force stabilized the country enough to hold elections. The IMF and the World Bank worked with the new government to clean up the financial chaos and set up sane banking regulations, and by August of 1997, Albanias nightmare had ended.

A financial system hardly anyone understands propped up by legions of new investors and not subject to any kind of regulationI know that reminds me of something.