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This exact reasoning can be applied to the buying and selling of gold, can it not? I’m not saying that therefore it’s moot, but is there a difference? Would you

• kthejoker2 5y ago
  The key difference between just pure bubble assets (where extrinsic demand outstrips intrinsic demand) and Ponzi schemes are the representation of the real thing being bought underneath. In the gold market, you are buying a contract to deliver you physical gold at a point in time. Similarly with tulips, Beanie babies, fine art, and old watches the underlying asset is what it is. MLMs and other traditional pyramid schemes also do typically hand you real assets, and so are not inherently Ponzi schemes. But when that extrinsic demand is driven by fraudulent claims (like Madoff's "beat the market every year" returns), then it can be considered a Ponzi scheme, because they don't even get the tulips or Picassos or whatever, they get nothing. The gray area, especially with MLMs, is what kind of support and service benefits you get - these are often fraudulent or misleading (Ponzi scheme) but they don't inherently have to be.