3 ms·

The Stock Market Is a Ponzi Scheme

5 points by creolabs 6y ago

smabie 6y ago
Like other things, stock have value because other people think they have value. Even stocks than pay dividends pay it in fiat, which only has value if other people think it has value. Ultimately, there's not much difference between stocks that pay dividends to those that don't, when you really get down to it. I suppose you could make an argument that stocks that paid dividends in food or slaves would be the only ones that had "non-Ponzi" value, since these things have value apart from any sort of value other people place on them. Other items in this category of inherent value might include guns, ammo, or alcohol. Perhaps some find it scary that we collectively value some things so highly that are pretty arbitrary, but I think it's only natural. Abstractions are core to what we are as a people. In short, if non-dividend paying stocks lack any value, so do most things in the world. Also, about Ponzi schemes, there's no real problem if the amount of capital flowing in increases at an exponential rate. In the last hundred years, this exponential inflow has not been a problem, so things have worked out pretty well. Though, in regards to the voting rights, I do think we'll see the end of ridiculous supervoting shares, at least for awhile. After WeWork, I think the paradigm has shifted.
- rumanator 6y ago
  > pay it in fiat, which only has value if other people think it has value. That's not correct. The value of fiat currency is pinned to the production output of an economy due to the fact that taxes are exclusively paid with it.
  - smabie 6y ago
    Yes, the people in the government assign it value. How is that different from what I said?
    - rumanator 6y ago
      > Yes, the people in the government assign it value. No, they don't. At most "the people in the government" set rules that define the conversion rate between the domestic product and your contribution, which is expressed in fiat currency. No one states on a whim how much a unit of currency is worth. The process is not arbitrary. The only parameter that's arbitrary is the percentage of your anual production that you are obliged to pay the state.
neximo64 6y ago
Step 1) Sell your Google to me for $1.0. Step 2) Use board to increase dividends to me to 80% of cash flow. Step 2) (Other party) Whoops, stocks do have value even if they don't pay a dividend. Article debunked.

5 points by creolabs 6y ago

Like other things, stock have value because other people think they have value. Even stocks than pay dividends pay it in fiat, which only has value if other people think it has value. Ultimately, there's not much difference between stocks that pay dividends to those that don't, when you really get down to it. I suppose you could make an argument that stocks that paid dividends in food or slaves would be the only ones that had "non-Ponzi" value, since these things have value apart from any sort of value other people place on them. Other items in this category of inherent value might include guns, ammo, or alcohol. Perhaps some find it scary that we collectively value some things so highly that are pretty arbitrary, but I think it's only natural. Abstractions are core to what we are as a people. In short, if non-dividend paying stocks lack any value, so do most things in the world. Also, about Ponzi schemes, there's no real problem if the amount of capital flowing in increases at an exponential rate. In the last hundred years, this exponential inflow has not been a problem, so things have worked out pretty well. Though, in regards to the voting rights, I do think we'll see the end of ridiculous supervoting shares, at least for awhile. After WeWork, I think the paradigm has shifted.

rumanator 6y ago
> pay it in fiat, which only has value if other people think it has value. That's not correct. The value of fiat currency is pinned to the production output of an economy due to the fact that taxes are exclusively paid with it.
- smabie 6y ago
  Yes, the people in the government assign it value. How is that different from what I said?
  - rumanator 6y ago
    > Yes, the people in the government assign it value. No, they don't. At most "the people in the government" set rules that define the conversion rate between the domestic product and your contribution, which is expressed in fiat currency. No one states on a whim how much a unit of currency is worth. The process is not arbitrary. The only parameter that's arbitrary is the percentage of your anual production that you are obliged to pay the state.

neximo64 6y ago

Step 1) Sell your Google to me for $1.0. Step 2) Use board to increase dividends to me to 80% of cash flow. Step 2) (Other party) Whoops, stocks do have value even if they don't pay a dividend. Article debunked.