“ In 1920, Charles Ponzi made use of the idea that profit could be made by taking advantage of the differing postal rates in different countries to buy IRCs cheaply in one country and exchange them for stamps of a higher value in another country. His attempts to raise money for this venture became instead the fraudulent Ponzi scheme.[24]
In practice, the overhead on buying and selling large numbers of the very low-value IRCs precluded any profitability. The selling price and exchange value in stamps in each country have been adjusted to some extent to remove some of the potential for profit, but ongoing fluctuations in currency value and exchange rates make it impossible to achieve this completely, as long as stamps represent a specific currency value, instead of acting as vouchers granting specific postal services, devoid of currency nomination.[25]”
I am told this is how bilat gaming in the POTS telephone days worked: you found an economy which had a deficit in billing settlement with a US phone net, and exploited it with call initiation and call termination through a PBX to make coin off the ex-pats calling home, with the phone company happy to soak the time on a long held international call to get back to parity in the bilat settlement.
There were said to be queues outside the offices of shops, bodega in NY for the community in question all day and all night.
People gamed MaBell to take advantage of currency exchange rates while offering a long distance service that was very popular with people from that specific country
Not really currency rates. More the private settlement between national carriers which were a bilateral peering agreement, not unlike current peering/settlement between ISPs: neither party wants to give money but loves receiving money and in many respects, I am told the USG asked the bells to use this as a way to shovel money into developing economies worldwide: Unlike every other economy, the US had no single nationalised Public Telephone Company or PTT, so there was a wierd asymmetry around this process, US foreign policy, aide money.
By turning a blind eye to some rather odd call source and call sink behaviours, a lot of cash went from the US into the national telcos overseas. Where it went after that isn't entirely clear.
