Can MMM be banned? I think that to ban something, you need at least a vague idea of what phenomenon you’re dealing with.
A money pyramid is the most extreme manifestation of what we call a “bubble.” What, then, is a bubble? A person in their right mind will always seek maximum return per unit of effort. In a monetary economy, this means investments flow toward higher profits (all else being equal). This is, if you like, a law of nature. However, in a normal economy, investments don’t materialize from nothing; to invest, you must first save—that is, reduce your current consumption for the sake of more valuable future goals. A classic example: to save for education, you must cut back on going to discotheques, drinking with friends, and buying expensive gadgets. This sacrifice allows you to achieve a more valuable result—a diploma and promising job prospects.
But when the financial system creates money out of thin air, then alongside genuine savings, phantom money—unbacked by reduced consumption and “produced” by the banking multiplier—pours into places of “elevated yield.” This is where the “bubble” arises. Since the Dutch tulip mania of the 17th century, all bubbles have had the same cause—rapid growth in the money supply. Typically, bubbles coalesce around “new industries” like railroads and steamships in the 19th century or dot-coms in the 20th, while real estate almost always has the appearance of a “bubble,” and so on. However, the economy is fundamentally an exchange of real goods, and money merely serves this process. Sooner or later it becomes clear that since nobody made savings (that is, nobody reduced their consumption), there aren’t enough real goods to fulfill the “bubble” projects, and the “bubbles” burst, often dragging down the entire economy with them.
Thus, the cause of any bubbles—and money pyramids in particular—is a financial system based on fractional reserve banking of demand deposits. With 100% reserves and the absence of central banks, or with a competitive monetary system, bubbles and pyramids would simply be impossible, or rather, they would be the province of complete clinical idiots, of whom there are still fewer than we think.
Therefore, banning money pyramids is meaningless. They will exist in one form or another as long as fiduciary money produced by the fractional reserve banking system exists.