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Is “everything a Ponzi scheme” unless the entity actually can create “value” greater than the money put into it? Is everything that exists in economies within

by dpflan 4y ago

Is “everything a Ponzi scheme” unless the entity actually can create “value” greater than the money put into it? Is everything that exists in economies within the bounds of national economics and central banks a Ponzi scheme? A reshuffling of money within the closed economic system?

oh_my_goodness 4y ago
No? But maybe a qualified No that varies over time. https://www.bbc.com/news/magazine-26680993 https://www.bbc.com/news/magazine-26680993
dwallin 4y ago
More like everything can become a bubble. I think many have started using "ponzi scheme" to reference bubbles that appear to be crafted or manipulated by bad actors.
Animats 4y ago
A Ponzi scheme is something where the payout for early investors comes from the pay-in of later investors. There's a lot of stuff with that property, from Uber to Bored Ape Yacht Club.
- Wohlf 4y ago
  Don't social safety nets and pensions also meet this definition?
  - cuteboy19 4y ago
    No it's like insurance, you are paying a premium for reduced risk. It should not been seen as an investment but rather as a service you pay for. So the question becomes 'worth it or not' instead
  - jandrese 4y ago
    In theory pensions should be paying out what you payed into them. It's basically a bet that you will die before you pull out more than you put in (plus whatever interest/gains was made on your money). Social Security is more like a Ponzi scheme in that it pays out retirees based on current income. There are some savings, but it was always a more or less direct payment of the old from the working age. The only thing that keeps it from being a Ponzi scheme is that they aren't pretending that it's some magical money making scheme that is generating "returns" to pay out to the early investors. The accounting is all front and center. IMHO for something to qualify as a Ponzi scheme there must be a form of deception involved. Investors must think that they are realizing outsized returns and not because they are in on the scam. Obviously the guys at the top know it is a scam, but the vast bulk of the participants must be kept in the dark to keep it running.
- anm89 4y ago
  This is a completely invalid definition of a ponzi scheme. What you have described is anything that is sold on an open market that is not directly used by the first buyer. By nature, every one of those things only pays out earlier investors when later investors buy in. A ponzi scheme involves a company who has no underlying revenue model and just shuffles money from late investors to early investors. So uber isn't a ponzi scheme because it generates revenue with an actual line of business. The fact that investors buy into at different times makes it a business like every other public business in our economy, not a ponzi scheme.
  - itsoktocry 4y ago
    >A ponzi scheme involves a company who has no underlying revenue model and just shuffles money from late investors to early investors. Which is exactly what Uber has done for 10 years. Revenue has nothing to do with it. How else do you explain people becoming filthy rich owning companies losing 10s of billions of dollars?
    - kasey_junk 4y ago
      Uber is quite upfront about their revenue/profits. A key characteristic of a Ponzi is that you disguise new investments as revenue/profit. Uber might be a bad investment but it’s not a Ponzi scheme.
      - kodah 4y ago
        There really does need to be a term beyond SPAC that we can use to describe profitless companies seeking investment.
    - anm89 4y ago
      Googled Uber 2021 Revenue. > $5.78 billion >Uber wrapped 2021 with strong revenue growth and greater adjusted profitability. Today I guess $5.78 billion dollars is pretty close to 0 dollars right ?
      - 4y ago

by dpflan 4y ago

oh_my_goodness 4y ago

No? But maybe a qualified No that varies over time. https://www.bbc.com/news/magazine-26680993 https://www.bbc.com/news/magazine-26680993

dwallin 4y ago

More like everything can become a bubble. I think many have started using "ponzi scheme" to reference bubbles that appear to be crafted or manipulated by bad actors.

Animats 4y ago

A Ponzi scheme is something where the payout for early investors comes from the pay-in of later investors. There's a lot of stuff with that property, from Uber to Bored Ape Yacht Club.

Wohlf 4y ago
Don't social safety nets and pensions also meet this definition?
- cuteboy19 4y ago
  No it's like insurance, you are paying a premium for reduced risk. It should not been seen as an investment but rather as a service you pay for. So the question becomes 'worth it or not' instead
- jandrese 4y ago
  In theory pensions should be paying out what you payed into them. It's basically a bet that you will die before you pull out more than you put in (plus whatever interest/gains was made on your money). Social Security is more like a Ponzi scheme in that it pays out retirees based on current income. There are some savings, but it was always a more or less direct payment of the old from the working age. The only thing that keeps it from being a Ponzi scheme is that they aren't pretending that it's some magical money making scheme that is generating "returns" to pay out to the early investors. The accounting is all front and center. IMHO for something to qualify as a Ponzi scheme there must be a form of deception involved. Investors must think that they are realizing outsized returns and not because they are in on the scam. Obviously the guys at the top know it is a scam, but the vast bulk of the participants must be kept in the dark to keep it running.
anm89 4y ago
This is a completely invalid definition of a ponzi scheme. What you have described is anything that is sold on an open market that is not directly used by the first buyer. By nature, every one of those things only pays out earlier investors when later investors buy in. A ponzi scheme involves a company who has no underlying revenue model and just shuffles money from late investors to early investors. So uber isn't a ponzi scheme because it generates revenue with an actual line of business. The fact that investors buy into at different times makes it a business like every other public business in our economy, not a ponzi scheme.
- itsoktocry 4y ago
  >A ponzi scheme involves a company who has no underlying revenue model and just shuffles money from late investors to early investors. Which is exactly what Uber has done for 10 years. Revenue has nothing to do with it. How else do you explain people becoming filthy rich owning companies losing 10s of billions of dollars?
  - kasey_junk 4y ago
    Uber is quite upfront about their revenue/profits. A key characteristic of a Ponzi is that you disguise new investments as revenue/profit. Uber might be a bad investment but it’s not a Ponzi scheme.
    - kodah 4y ago
      There really does need to be a term beyond SPAC that we can use to describe profitless companies seeking investment.
  - anm89 4y ago
    Googled Uber 2021 Revenue. > $5.78 billion >Uber wrapped 2021 with strong revenue growth and greater adjusted profitability. Today I guess $5.78 billion dollars is pretty close to 0 dollars right ?
    - 4y ago