Growth Ponzi Scheme - Core Insights

Charles Marohn
Charles Marohn
  • Updated

The Growth Ponzi Scheme, also called the "Municipal Ponzi Scheme," is a core Strong Towns insight describing the financial characteristics of post-war North American growth patterns.

In the Growth Ponzi Scheme, municipalities receive the modest near-term financial benefits from new development in exchange for the larger long-term financial commitments of providing ongoing service and maintenance. 

There are three stages to the Growth Ponzi Scheme. They are:

  1. The illusion of wealth that comes from new growth.
  2. A period of accelerating community obligations and municipal debt.
  3. Municipal insolvency and decline.

The Growth Ponzi Scheme is not nefarious; there is not a specific individual or group that has created it for their own benefit. It has emerged from a broad cultural consensus about economic growth, development patterns, and debt.

The Growth Ponzi Scheme and the "illusion of wealth" are described in chapter three of Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity.


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