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FWIW I have difficulty distinguishing the difference between a Ponzi scheme and "The Time Value of Money" concept itself. Every place I see that offers interest

FWIW I have difficulty distinguishing the difference between a Ponzi scheme and "The Time Value of Money" concept itself. Every place I see that offers interest on crypto deposits, I fear they have no business plan to generate the profits to pay the interest on a deflationary fake internet money in the first place. My fear is they are just Ponzi-ing on Wayne! seeking the next highest interest rate holding the biggest bag, hoping the 'ol Time Value of Money will save their ass. The whole house of cards has a lot to do with the _velocity_ at which the money moves and whether it's stagnating or generating interest somewhere else. My rant is over. None of this stuff has affected me.

JALTU 4y ago
Time value of money is not the same. It’s actually simple and elegant and flexible, and to your point, you want to see the borrower have a plan, so to speak. Or cash flows. Or collateral. Or all of the above. And still, you can lose. But the concept of the price of money is separate from that.
largepeepee 4y ago
Simple. It is always can you trust the other party. And that's the basis of society, government and money.
ProjectArcturis 4y ago
>Every place I see that offers interest on crypto deposits, I fear they have no business plan to generate the profits to pay the interest on a deflationary fake internet money in the first place. You are correct. Literally every place offering high interest rates on crypto deposits is a Ponzi scheme.
arkis22 4y ago
The concepts bleed into each other, but Matt Levine explains it well. The Ponzi scheme is unsustainable. it gives you a solvency problem, your assets are bad and no amount of time will help. With fractional reserve banking run on banks usually come down to a liquidity problem, everyone wants their money now and you don't have all of it. So you call up someone with cash, like the FED, and theyll lend to you because you are a chartered, regulated bank. basically the difference is asset quality and proper accounting. Banks are similar to ponzis, but they are HIGHLY regulated to ensure their continued operation.

JALTU 4y ago

Time value of money is not the same. It’s actually simple and elegant and flexible, and to your point, you want to see the borrower have a plan, so to speak. Or cash flows. Or collateral. Or all of the above. And still, you can lose. But the concept of the price of money is separate from that.

largepeepee 4y ago

Simple. It is always can you trust the other party. And that's the basis of society, government and money.

ProjectArcturis 4y ago

>Every place I see that offers interest on crypto deposits, I fear they have no business plan to generate the profits to pay the interest on a deflationary fake internet money in the first place. You are correct. Literally every place offering high interest rates on crypto deposits is a Ponzi scheme.

arkis22 4y ago

The concepts bleed into each other, but Matt Levine explains it well. The Ponzi scheme is unsustainable. it gives you a solvency problem, your assets are bad and no amount of time will help. With fractional reserve banking run on banks usually come down to a liquidity problem, everyone wants their money now and you don't have all of it. So you call up someone with cash, like the FED, and theyll lend to you because you are a chartered, regulated bank. basically the difference is asset quality and proper accounting. Banks are similar to ponzis, but they are HIGHLY regulated to ensure their continued operation.