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There is an element of ponzi because none of the actors have an interest to break the cycle. Mutual hallucination might be a better term though. Like you would

There is an element of ponzi because none of the actors have an interest to break the cycle. Mutual hallucination might be a better term though. Like you would think the asset buyers would have an incentive to stop holding the loans and the whole thing would collapse, but because the buyer are investing with other peoples money they are also incentivized to keep the cycle going. The people whose money is eventually going to be lost have no way to stop this because the money is either in a pension fund or they aren’t knowledgeable enough to understand the issue

JumpCrisscross 3y ago
> none of the actors have an interest to break the cycle This is collective behaviour. If you discover you’re in a Ponzi scheme, it’s in your interest to get your money out first.
- throw9away6 3y ago
  Yeah but here it’s never actually your money and if the cycle breaks you are screwed anyway. If you fail with everyone else then you can say that nobody could have ever predicted this.
- sangnoir 3y ago
  > If you discover you’re in a Ponzi scheme, it’s in your interest to get your money out first. You can either cut your losses and not get your money back (if you're an ethical operator), of you can actively or passively allow other people topit in their money so you can get yours out first. There are similarities where rational vested actors want the charade to continue for a little while longer - the more money you put in, the longer your commitment to the mirage is.