3 ms·

Everyone cashing out of the stock market now is also being paid by the people cashing in now. That's not what a Ponzi scheme is. The defining feature of a Ponzi

by makomk 5y ago

Everyone cashing out of the stock market now is also being paid by the people cashing in now. That's not what a Ponzi scheme is. The defining feature of a Ponzi scheme is that it claims to offer interest on deposits in excess of what the person running the scheme can actually earn, such that the only way to pay out that interest is by stealing from other people's deposits. It's this key feature that means that Ponzi schemes inevitably fail - those interest payments mean that the amount of money the scammer tells people they have in their accounts grows larger than the actual cash available at an exponential rate, and the only way to keep the scheme going is to find an exponentially increasing amount of new cash. Tether doesn't have this issue. They don't pay interest at all, so in theory there's absolutely no reason they can't structure the thing to be fully backed at all times (whilst probably also making money from interest themselves on the cash-like instruments they use to back it).

lamontcg 5y ago
> Everyone cashing out of the stock market now is also being paid by the people cashing in now. That's not what a Ponzi scheme is. There's an underlying cash flow to the business you're buying and the stock is supposed to give you a claim to dividends paid out by the corporation from those cash flows. The fact that the stock market is acting more and more like a Ponzi scheme doesn't make crypto any less of one. We're just forgetting how the stock market is supposed to operate. Oh also Madoff's Ponzi was an investment scheme where he just produced above average return on investment. He always beat the market, so people invested. He dealt with charities which didn't extract money often, so he had more predictable withdrawals. He was operating like a mutual fund. He wasn't promising a fixed percentage interest, he just always beat the market claimed to never lose money.
deleted 5y ago
[deleted]

by makomk 5y ago

lamontcg 5y ago

> Everyone cashing out of the stock market now is also being paid by the people cashing in now. That's not what a Ponzi scheme is. There's an underlying cash flow to the business you're buying and the stock is supposed to give you a claim to dividends paid out by the corporation from those cash flows. The fact that the stock market is acting more and more like a Ponzi scheme doesn't make crypto any less of one. We're just forgetting how the stock market is supposed to operate. Oh also Madoff's Ponzi was an investment scheme where he just produced above average return on investment. He always beat the market, so people invested. He dealt with charities which didn't extract money often, so he had more predictable withdrawals. He was operating like a mutual fund. He wasn't promising a fixed percentage interest, he just always beat the market claimed to never lose money.

deleted 5y ago

[deleted]