27 ms·

Serious question: how is that different from a Ponzi scheme?

• bunderbunder 12y ago
  Structurally, they have nothing in common. In a Ponzi scheme, you've got only one central figure playing everyone off. Classically, there's no underlying assets under it, it all exists on paper. The schemer promises everyone that they're getting great returns (on paper), and use new investors' money to cover the withdrawals of others in order to maintain the illusion. As soon as the rate of money coming in exceeds the rate of going out, the whole thing crumples and everyone loses everything. Good old-fashioned finding-the-greater-fool doesn't involve any of that. Everyone involves gets to keep all their money. This includes the greatest fool, too. Admittedly this poor soul has since found out that the thing they bought isn't worth what they thought it was worth, but still has exactly what they paid for.
  • Terr_ 12y ago
    Yeah, a Ponzi scheme requires lying about past and current performance, not just making super-rosy predictions about the future. The lie is "I did X very well, and that's where this money came from."
  • bunderbunder 12y ago
    Whoop, I got that backward - it's as soon as the rate of money going out exceeds the rate coming in.
  • maaku 12y ago
    > Good old-fashioned finding-the-greater-fool doesn't involve any of that. Everyone involves gets to keep all their money. This includes the greatest fool, too. Admittedly this poor soul has since found out that the thing they bought isn't worth what they thought it was worth, but still has exactly what they paid for. Then why is Groupon 1/4 it's post-IPO price, and how are the people who bought then not screwed over?