Pyramid schemes are also known as 'Ponzi schemes' in some variations. The basic principle is that a return is offered to members of a pyramid scheme either by directly signing up new members who provide income or by the Ponzi method, which is based on generating returns for existing members by revenues from an ever-increasing membership. The process in either case can't work. The simple fact of increasing membership also means increasing demand on revenue, and the new numbers of members will always be more than the existing base. Even the arithmetic doesn't work.
Examples of Pyramid Schemes:
|Bernard Madoff investment schemes (Ponzi variation)|
Any scheme based on the 'signup' methodology where returns are based on these principles.
The unsustainable exponential progression of a classic pyramid scheme.