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Would you agree that "outflows are only possible because the inflows are big enough so that the new investors can cover the payouts for the old investors until

by lvh 5y ago

Would you agree that "outflows are only possible because the inflows are big enough so that the new investors can cover the payouts for the old investors until eventually the bubble gets big enough" is a hallmark of a Ponzi scheme? You could disagree that that's the case for Tether, but that's what the article lays out, no?

gruez 5y ago
>Would you agree that "outflows are only possible because the inflows are big enough so that the new investors can cover the payouts for the old investors until eventually the bubble gets big enough" is a hallmark of a Ponzi scheme? that describes most speculative bubbles.
anm89 5y ago
This is the most egregrious of misdefinitions of a ponzi scheme that gets thrown around becuase it literally fits the profile of every security and commodity in existence. You are describing the law of supply and demand in an open market place.
- lvh 5y ago
  Surely we can agree that every security in existence does not solely rely on inflows from new investors in order to pay out old ones. You keep saying "this isn't a Ponzi scheme" but I haven't seen you elucidate your objection. Promised returns? A charismatic wealth manager? What is it that you feel defines them?
  - anm89 5y ago
    Surely we cannot agree on this. Explain to me what would happen if I was holding an Oz of gold or copper and suddenly the entire bid side of the market dissapeared (ie there was no inflows to the market). What is the new market clearing price for the commodity. 0. That's literally what buying a thing is(in all cases and for everything). It's a an asset inflow exchanged for an asset outflow. Now replace gold or copper with any equity. Let's assume one that doesnt pay a dividend not to complicate things. Literally nothing changes. The sale value of your equity is zero when there are zero inflows to the market.
    - seanp2k2 5y ago
      I wouldn’t agree that it’s what buying a thing is in al cases for everything. If a retailer has a stock of iPads and no one has an active order open for one, they don’t just decrease the price until they get orders. Not everything moves in price according to market pressures, or does so over a time span of years, not days or seconds. PlayStation 5s and RTX3090 GPUs are incredibly in-demand, and indeed on auction sites they’re being sold for far above retail prices, but they’re also still being sold AT retail prices by retailers. Just because there are zero available doesn’t mean the price is now infinity. There might not be any available according to stock tracking websites, but if one were to put out an ad to buy a PS5 for a few thousand dollars, one could probably secure a PS5 relatively quickly. Markets can be made and they can be manipulated. Things don’t have to have an active bid/ask to have value. Is the value of $TSLA zero overnight when NYSE is closed? I would agree with the quote “ There's no such thing as a ‘free market’”

by lvh 5y ago

gruez 5y ago

>Would you agree that "outflows are only possible because the inflows are big enough so that the new investors can cover the payouts for the old investors until eventually the bubble gets big enough" is a hallmark of a Ponzi scheme? that describes most speculative bubbles.

anm89 5y ago

This is the most egregrious of misdefinitions of a ponzi scheme that gets thrown around becuase it literally fits the profile of every security and commodity in existence. You are describing the law of supply and demand in an open market place.

lvh 5y ago
Surely we can agree that every security in existence does not solely rely on inflows from new investors in order to pay out old ones. You keep saying "this isn't a Ponzi scheme" but I haven't seen you elucidate your objection. Promised returns? A charismatic wealth manager? What is it that you feel defines them?
- anm89 5y ago
  Surely we cannot agree on this. Explain to me what would happen if I was holding an Oz of gold or copper and suddenly the entire bid side of the market dissapeared (ie there was no inflows to the market). What is the new market clearing price for the commodity. 0. That's literally what buying a thing is(in all cases and for everything). It's a an asset inflow exchanged for an asset outflow. Now replace gold or copper with any equity. Let's assume one that doesnt pay a dividend not to complicate things. Literally nothing changes. The sale value of your equity is zero when there are zero inflows to the market.
  - seanp2k2 5y ago
    I wouldn’t agree that it’s what buying a thing is in al cases for everything. If a retailer has a stock of iPads and no one has an active order open for one, they don’t just decrease the price until they get orders. Not everything moves in price according to market pressures, or does so over a time span of years, not days or seconds. PlayStation 5s and RTX3090 GPUs are incredibly in-demand, and indeed on auction sites they’re being sold for far above retail prices, but they’re also still being sold AT retail prices by retailers. Just because there are zero available doesn’t mean the price is now infinity. There might not be any available according to stock tracking websites, but if one were to put out an ad to buy a PS5 for a few thousand dollars, one could probably secure a PS5 relatively quickly. Markets can be made and they can be manipulated. Things don’t have to have an active bid/ask to have value. Is the value of $TSLA zero overnight when NYSE is closed? I would agree with the quote “ There's no such thing as a ‘free market’”