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The scheme of getting new depositors to pay out existing depositors is better known by another name: a Ponzi scheme.
by bcrl 4y ago
The scheme of getting new depositors to pay out existing depositors is better known by another name: a Ponzi scheme.
- tim-- 4y agoSeriously, when you look into how banks are run, they really do start to begin looking like legal Ponzi schemes. https://www.bankrate.com/banking/cds/cd-ladder-guide/ https://www.bankrate.com/banking/cds/cd-ladder-guide/ They take your deposits, use a bit to pay other people's withdrawals, promise an unrealized gain to money held in your account that they might not be able to pay if everyone pulls out their cash at the same time...
- ahepp 4y agoThe defining characteristic of a Ponzi scheme is that there is no underlying investment. Most banks make sound underlying investments, but even in SVB’s case there were investments, they were just bad.