Screenshot of MMM-94 table.xls

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   As always though, there's a small BUT. To preserve the maths behind it, the number of standard units in the System must remain the same in each new block. In other words, the new prices should be used to sell and buy out the same number of “mini calendars” as was sold/bought out at the previous price.

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   In 1994, we couldn't achieve it. We didn't have the right financial tools available. Anyway, practice has shown that the more evenly members invest and WITHDRAW their funds, the more stable the System will be. This is why, specifically, MMM-94 did not allow huge wire transfers.

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   After Sergey came up with this algorithm, we spent the entire 1993 to prepare the launch of the System. We had discussions, and arguments, and updates. We used SuperCalc

software to make mathematical tables and emulate various options for future probabilistic behavior of members. We had endless consultations with lawyers, attorneys and professional accountants. As a result of all this brainstorming, we selected “share certificates” as “mini calendars” for the launch. They were totally useless, unsecured pieces of paper, but it was the only way for a legal entity to rapidly start working with cash on hand.

   Thus, on Tuesday, February 1, 1994 the System was launched.

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   May 5, 1994. Sergey and I headed for our traditional once-a-year spring fishing trip to the Ugra river, 5 km upstream from the town of Yukhnov. The edge of the forest is 100 meters away from the notorious willow described at the beginning of S. Mavrodi's book “Lucifer’s Son”.

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   We crossed the river to another bank, to a small beach with a spring to the right of the willow. We went deeper into the forest to look for sponge mushrooms. There's an old opening close by, some years it's full of mushrooms. But sometimes it's "big nothing". That year it was "big nothing". Heading back, we sat down on a log on the edge of the forest. Sergey asked me,

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   “How's it going on Varshavka anyway?” (I supervised operations of MMM's headquaters on 26 Varshavka at the time.)

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   —Mice are eating the money.
   —What do you mean, mice?!
   —Senior teller called me some time ago. They removed the nearest layer of wads (of notes) in one of the warehouses for payouts, and they saw some wads at the back were gnawed on the corners by mice. So she asks me what they should do, how they should handle these wads.
   —Why didn't they take care of it before?
   —The basement has several big rooms stuffed full with cash. Until you remove the top layer, how do you know what's inside?
   —Humph... What did you tell her to do then?
   —I told her to get a couple of cats, what else can we do?
   —I see. But how's it going business-wise?
   —It's [censored] business-wise. Real and serious. No one sells it; they just buy it.
   —Like, no one at all?
   —Well, not really. Some do sell. It's 2-3 percent of the receipts per day. Some of this 2% sell it in the morning, and come running back in the evening, shouting “I've changed my mind”, “My silly wife has talked me into doing this”, etc...
   —What do they want then?
   —They want the operators to pretend there was no exchange in the morning, “I'll just quietly give you the morning money back, and you'll give me my certificates.” They also offer operators huge bribes for this kind of “return”.
   —Why do they do this?
   —What do you mean why? They'll spend the entire amount to buy more certificates tomorrow. But tomorrow the price will be different. If they own a lot of certificates, they'll lose a bunch of money due to the price difference because they had this one-minute weakness today.
   —I see. How many depositors do we have right now?
   —We've got 15 mln unique ones in the database.
   —In other words, if an average family has at least 3 persons, it's what, 45 mln?
   —Well, if you want to count this way, yup. As for the real number — God only knows. There's also a bunch of “delegates” from entire plants, institutes, state agencies from all over the country. There's this single entry in the database, but how many people is behind it — how do you know?
   —You're right though, if no one sells it, it's, like, [censored]! Jesus! Here's what human greed can do! I couldn't even imagine anything like this when we started off. What's the disbalance between selling and buying out per day, in monetary terms?
   —Before we headed on the fishing trip, reports from all over Russia for the last Tuesday showed receipts exceeded payments by about 35 mln dollars per day. Over time, this excess will only grow.

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   —In other words, MMM's “net profit” was larger than any Arab sheik could dream of. In the future, this “profit” will only grow, all things considered... It's a dream for any, [censored], conman. [CENSORED]!!! [CENSORED]!!!
   —Do you remember we were offered a building for MMM's printing house a short while ago? The seller of the building found out the buyer was related to MMM and now asks us to pay him in MMM certificates instead of dollars!
   —Well, it's understandable. Why ask for dollars if the price of the certificates is rising 100 times faster and they can be exchanged for dollars at any time.
   —What do we do next then? We want depositors to buy and sell certificates worth approximately the same amount every day. We don't want this “net profit”, or the System will transform into a “pyramid”, with our debt growing parabolically. Even now we won't be able to make payments to all of them if 100% of depositors come on the same day!
   —[Thoughtful] 100% will never come on the same day. There's this mathematical thing, “Games Theory”. With uniform distribution, [ugh-ugh-ugh], the probability of even 40% coming together is negligibly small.
   —Say what? Are you trying to be smart again with your maths?
   —Never mind..

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   Back then, by that willow, Sergey told me we were able to get hands on something which was not a mere mathematical algorithm, but a financial nuke. If detonated in any country, like a giant vacuum cleaner, it would rapidly suck in all of this country's money. It would make banks go bankrupt, close down exchanges and other “investment funds”; shut down plants and factories; tear down industry and infrastructure. It would be a “financial apocalypse” — the old financial system would collapse.

   Would people want to do anything if they could make profit all the time, doing nothing, and this profit could not be compared to any other business, be it legal or criminal?

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   I suggested:

   —Shall we shut it all down, maybe? Let's pay them all back the nominal value they have invested. Let's stop it. We've got the money we earned in the old business of selling office equipment. Or we could pay them back 90%, maybe 80. We could count how much we could pay back... If it's, [censored], like that today, what will it be like tomorrow?
   —“They told me that the road I took would lead me to the Ocean of Death”, Sergey quoted.
   The Strugatsky brothers were our favorite novelists; we'd known all their books almost by heart. I continued the quotation in my mind, “... and from halfway along, I turned back. And ever since, all the paths I have roamed were entangled, and crooked, and forsaken.”    Then I asked,

   —“What do we do then?”
   —We need to go west as soon as possible. All cash in Russia and all our debts to MMM depositors are peanuts compared to THEIR cash. We'll turn on the “vacuum cleaner” over there, we'll accumulate all cash from all over the world in Russia and use it to pay back to everyone in Russia. Gradually, we'll shut down MMM in Russia — we live here, why destroy our own country? Where will we go fishing then? ;) Here's the plan.
   We won't be able to stop now. With 15 mln in our database, at least 45 mln Russians are already involved with MMM, and the authorities could always find one or 2 dissatisfied depositors. Or they could make them up. In accordance with the law, it'll be enough to be charged with fraud, even if you make payouts to all 45 mln people, except these 2. That's the law.

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   Sergey Mavrodi once said, “You don't need to be afraid of the state. It's just a huge heavy bulldozer. Yes, you'd better avoid standing in its way. But due to its huge weight, it's also highly inert: you can simply make a step sideways, and it'll pass by.

   The law is just a fence that separates common people from common wrongdoers. At elevated orbits, there's no law, there're only concepts and directions. You cannot break the law because in this case you'll be playing an away game. But if you find a loophole in the law, you have the time to use it until the state bulldozer notices you, comes to a halt, turns around and moves right at you. Then you need to look for another loophole in the law...”

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   MMM couldn't go west in 1994. Due to a betrayal by a very expensive and high-raking English “attorney and gentleman in the nth generation”, UK and US borders were sealed off for dozens of tons of MMM certificates using mere power methods (but that's, as they say, another story for another time). Soon after this, the Russian authorities suddenly “woke up” at the level of the President and the Prime Minister and destroyed MMM-94 using the same power methods. It might be a coincidence, of course...

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   In 1997, while analyzing lessons learned from MMM-94, I was thinking, “Could we improve the algorithm for overlapping double exchange rates to strike a balance between the volumes of sales and payouts of “mini calendars” in each block AUTOMATICALLY? In this case, the System would be able to make payouts to 100% of its members ACCORDING TO THE RULES and would become invincible!

   I found a talented Candidate of Physical and Mathematical Sciences and together we spent 2 months trying to develop this miraculous algorithm in SuperCalc every evening. We pulled it off in the end! We created a MATHEMATICAL model that allowed all members to take turns to make a predefined profit (30, 50, 100 % per month, just like in MMM-94) under normal conditions. If the system shuts down its operations for any reason, no one is cheated: a half of members is left with their exorbitant profit while the other half only receives the predefined percentage of the real deposit (70%, for instance).

   The system is then restarted as a new copy (with a new Cycle) starting with block 1 and continues its operations seamlessly. All of the system's liabilities from the previous cycle are PRESERVED. In the restarted system, those who weren't lucky last time will be able to compensate for their losses pretty fast. You might even give them a head start — a chance to re-invest the remainder of their funds from the old cycle into the first block of the new cycle. It's honest and transparent, declared in advance and validated mathematically. The system can also be set up for any target values and volumes using 6 control parameters.