Where is all that money?

Fortune has a good article on Bernie Madoff in their current publication. It's long, but explains in detail how the scam was pulled off. It also answers a very important question for me: where did the $60 billion go?

The $60 billion everyone hears about is the present value of all Madoff investor's investments. Madoff never took in $60 billion. He simply said everyone was getting 15-20 percent returns. Compound money for 20 years and you get some large numbers.

Bernie got into trouble when too many people tried to collect. He was able to alley investors for years as the collectors never out numbered the contributors. However when the market went to hell, the collectors collected and ran Bernie out of money. And that opened the doors wide open.

So where did the real money (around $20 billion) go? It went to the folks who pulled money out in the 20 to 30 previous years.