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It tires me when I hear people ranting that some government backed & sanctioned economic institution is an illegal ponzi scheme. Why? Because they are a ponzi

It tires me when I hear people ranting that some government backed & sanctioned economic institution is an illegal ponzi scheme. Why? Because they are a ponzi scheme, and they are legal by the virtue of being run by the government. There are different laws that govern what an individual or a corporation can do, and what a government can do. We give the government a limited right to do lots of things (in certain circumstances) which we don't let individuals and corporations do: - kill people (military, capital punishment) - kidnap people (police arrests) - imprison people (jail, prison) - run protection rackets/extortion (taxation) - gambling (state lotteries) - run ponzi schemes (social security system, fractional reserve banking) We agree to all of this as a society. Therefore, it is not illegal. We should always keep an eye on the extent to which those special rights are exercised by the government. We should actively discuss and modify laws that govern these special rights we grant to the government, so that they reflect the will of the people. However, just yelling "Ponzi scheme! Illegal!" is ignorant. It's as if someone stood up all of a sudden and yelled "The government is killing people in wars! That's illegal". Of course they are, and to a large extent it is legal, because we have implicitly granted the government that right as society.

dwater 8y ago
That does not seem relevant to this article, because it does not call the system illegal. It calls it "effectively a Ponzi scheme", and then goes on to offer evidence to support that claim. A Ponzi scheme is "an investment system where the investment profits are paid with the money from other investors, and those who experience profit believe the profits come from non-investors such as business activities, or the earnings and growth of a company." (Wikipedia) The author makes a clear attempt at analogy: "Debt-financed prosperity is typically abetted by central banks that encourage consumers and speculators to borrow (the demand side of Ponzi finance) and also encourage yield-seeking demand among investors for newly-issued debt securities that offer a “pickup” in yield (the supply side of Ponzi finance)."
- koliber 8y ago
  I think you're right. This was more of a pent up reaction triggered by the article, even though the article is not making that point directly. It seems I am coming across the naive view a lot lately. Thanks for listening to me rant.

dwater 8y ago

That does not seem relevant to this article, because it does not call the system illegal. It calls it "effectively a Ponzi scheme", and then goes on to offer evidence to support that claim. A Ponzi scheme is "an investment system where the investment profits are paid with the money from other investors, and those who experience profit believe the profits come from non-investors such as business activities, or the earnings and growth of a company." (Wikipedia) The author makes a clear attempt at analogy: "Debt-financed prosperity is typically abetted by central banks that encourage consumers and speculators to borrow (the demand side of Ponzi finance) and also encourage yield-seeking demand among investors for newly-issued debt securities that offer a “pickup” in yield (the supply side of Ponzi finance)."

koliber 8y ago
I think you're right. This was more of a pent up reaction triggered by the article, even though the article is not making that point directly. It seems I am coming across the naive view a lot lately. Thanks for listening to me rant.