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In common parlance, an asset bubble is called a Ponzi scheme. Actual Ponzi schemes should be referred to as “rob peter to pay Paul” scams to prevent confusion.

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CydeWeys 3y ago
Or we could just use the actual definitions of words rather than make everything worse and harder to follow along with.
- yazaddaruvala 3y ago
  Or we could just be flexible and evolve with any reasonable colloquialisms of the time.
  - Atheros 3y ago
    In a ponzi scheme, some actors go to jail for the rest of their lives and in a speculative bubble they do not. There are good reasons to have separate words for these separate concepts. Dishonest people will always use hyperbole when describing the world. That hyperbole is not justification for honest people to abandon technical definitions. And that is what you are proposing. Having everyone "evolve" on the definition of 'ponzi scheme' means that the current definition is erased. But the current definition is still in use!
    - yazaddaruvala 3y ago
      If a speculative bubble was later found to be a victim of pump and dump, then people also can go to jail. At that point did it stop being a speculative bubble? The reality is, reality doesn't have such distinct boundaries as you are trying to enforce. At the end of the day, what is the point of a word's definition? To help communicate an idea to other people and society. The US financial and legal systems are intentionally designed to segregate the less educated. Confusion is their primary strategy to make more money! You can either choose to help them continue the segregation, or you can chose to liberate financial and legal concepts to everyone. How can you help? By understanding what parts of the concept were easy to understand, what colloquial language is most used to describe it, and then realizing the gaps between the coloquial and technical definitions. Trying to resolve those gaps with "you're using ponzi wrong" continues the segregation and confusion. Trying to resolve the gaps with "Oh.. you think a ponzi scheme is any scam using obfuscated financial instruments. Ok fair enough lets start the conversation there." you would then continue and say "A typical ponzi schema has a single power structure with a single voice and name e.g. Bernie Madoff. However, in this case it is a ponzi scheme with a distributed set of actors i.e. no one is working together, but still there is large scale issue occurring - we typically call this a speculative bubble / coordinated pump and dump - its not always easy to know what exactly is going on". You could even continue "Realestate in general has actually been a generational pump and dump scheme. Its not that grandma's everywhere meant to harm anyone, but the common advise to 'buy a hose at any cost' is in favor of the realestate owning elderly (i.e. most of them) and as such is difficult for them to say anything else. Additionally, because its been generational, it seems to have been working for quite some time giving it even more credence. At the end of the day tho, it is a distributed ponzi scheme - if you go to withdraw your money and no one is willing to add even more money (i.e. how much you want, and the "processing fees" around it) - you will not get your money."
      - Atheros 3y ago
        If your goals is to communicate an idea to other people or society and you are the one talking, you can and should choose to not use incorrect language. Even if the other person sometimes uses incorrect language. You insistence on using incorrect language as a means of "resolving" segregation and confusion is absurd. There is no such thing as "a distributed ponzi scheme" and telling people that will increase, not decrease, "segregation and confusion". > reality doesn't have such distinct boundaries as you are trying to enforce. It really does, as defined by law and consequences. A ponzi scheme necessarily involves fraud and a speculative bubble does not necessarily involve fraud. The fact that some speculative bubbles do involve dishonesty and manipulation (a pump and dump, like you mentioned) does not change that!
JumpCrisscross 3y ago
> In common parlance, an asset bubble is called a Ponzi scheme This is a crypto phenomenon. Porting crypto’s corruptions of financial and economic terms, from Ponzi to inflation and market cap, given the benefit of hindsight, doesn’t make sense. Here’s, mechanically, why it’s not a Ponzi scheme: there is no incentive to get your money out first.

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[deleted]

CydeWeys 3y ago

Or we could just use the actual definitions of words rather than make everything worse and harder to follow along with.

yazaddaruvala 3y ago
Or we could just be flexible and evolve with any reasonable colloquialisms of the time.
- Atheros 3y ago
  In a ponzi scheme, some actors go to jail for the rest of their lives and in a speculative bubble they do not. There are good reasons to have separate words for these separate concepts. Dishonest people will always use hyperbole when describing the world. That hyperbole is not justification for honest people to abandon technical definitions. And that is what you are proposing. Having everyone "evolve" on the definition of 'ponzi scheme' means that the current definition is erased. But the current definition is still in use!
  - yazaddaruvala 3y ago
    If a speculative bubble was later found to be a victim of pump and dump, then people also can go to jail. At that point did it stop being a speculative bubble? The reality is, reality doesn't have such distinct boundaries as you are trying to enforce. At the end of the day, what is the point of a word's definition? To help communicate an idea to other people and society. The US financial and legal systems are intentionally designed to segregate the less educated. Confusion is their primary strategy to make more money! You can either choose to help them continue the segregation, or you can chose to liberate financial and legal concepts to everyone. How can you help? By understanding what parts of the concept were easy to understand, what colloquial language is most used to describe it, and then realizing the gaps between the coloquial and technical definitions. Trying to resolve those gaps with "you're using ponzi wrong" continues the segregation and confusion. Trying to resolve the gaps with "Oh.. you think a ponzi scheme is any scam using obfuscated financial instruments. Ok fair enough lets start the conversation there." you would then continue and say "A typical ponzi schema has a single power structure with a single voice and name e.g. Bernie Madoff. However, in this case it is a ponzi scheme with a distributed set of actors i.e. no one is working together, but still there is large scale issue occurring - we typically call this a speculative bubble / coordinated pump and dump - its not always easy to know what exactly is going on". You could even continue "Realestate in general has actually been a generational pump and dump scheme. Its not that grandma's everywhere meant to harm anyone, but the common advise to 'buy a hose at any cost' is in favor of the realestate owning elderly (i.e. most of them) and as such is difficult for them to say anything else. Additionally, because its been generational, it seems to have been working for quite some time giving it even more credence. At the end of the day tho, it is a distributed ponzi scheme - if you go to withdraw your money and no one is willing to add even more money (i.e. how much you want, and the "processing fees" around it) - you will not get your money."
    - Atheros 3y ago
      If your goals is to communicate an idea to other people or society and you are the one talking, you can and should choose to not use incorrect language. Even if the other person sometimes uses incorrect language. You insistence on using incorrect language as a means of "resolving" segregation and confusion is absurd. There is no such thing as "a distributed ponzi scheme" and telling people that will increase, not decrease, "segregation and confusion". > reality doesn't have such distinct boundaries as you are trying to enforce. It really does, as defined by law and consequences. A ponzi scheme necessarily involves fraud and a speculative bubble does not necessarily involve fraud. The fact that some speculative bubbles do involve dishonesty and manipulation (a pump and dump, like you mentioned) does not change that!

JumpCrisscross 3y ago

> In common parlance, an asset bubble is called a Ponzi scheme This is a crypto phenomenon. Porting crypto’s corruptions of financial and economic terms, from Ponzi to inflation and market cap, given the benefit of hindsight, doesn’t make sense. Here’s, mechanically, why it’s not a Ponzi scheme: there is no incentive to get your money out first.