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The Ponzi Scheme As Way of Life
I’m sorry, I’m having a bit of trouble getting all outraged about Bernie Madoff and his ponzi scheme. Yes, I’m shocked. Shocked and appalled. You mean, someone was offering a scheme in which you pay present day participants with the funds of those who come in later, and then it fell apart. Gosh, that seems so unprecedented.
Yeah, I feel bad for those who were taken in, particularly for charities that lost their funds. But no worse than for those who lost their 401Ks or their pension funds on the stock market, for cities and states that can’t sell municipal bonds, and I feel far worse for the poor, who never had a glimmer of getting to participate in the get-rich-quick ponzi scheme that was a stockmarket that everyone said could have perpetual growth forever.
Madoff may be a criminal, but he’s a criminal in large part because he’s engaging in a particular form of ponzi scheme that we look down upon, one small enough to be called illegal. In general, we’re pretty comfortable with ponzi models -we live, quite happily, in a ponzi economy, one in which the concept of perpetual economic growth is sold, divvied up again and resold. We live in a Ponzi ecology where we borrow constantly against the future to pay for our present affluence.
Is this truly a Ponzi scheme? I think the answer is yes - a Ponzi scheme never really generates new wealth, it simply relies on a constant stream of new money. And since the eco-Ponzi economy relies most of all on reducing the capacity of future generations to live well - because natural resources and associated wealth are already drawn down, I think that it does meet the criteria at both the economic and ecological levels.
Most of us have been putting our money into 401Ks and Mutual funds, and now that money is disappearing - and it is disappearing again, because we live in a Ponzi economy, one in which new funds can, for a while, conceal the bankruptcy of a society that draws down its natural resources and leverages both its ecology and economy past bearing. Thus we get the mantra, as Bob Waldrop wisely observes, investing is saving that we all belong in the stock market:
“Lie the First: Money in the stock market is “savings”.
Reality: Money in the stock market is “speculation”. You buy a stock on the speculation that it will go up and you will sell it later at a profit and in the meantime, maybe get a regular dividend. It can also be considered casino gambling. It is not savings as we generally define the term, since it can be here today and gone five minutes later.
Lies the Second and Third: Everyone should be in the stock market. You can’t afford to NOT be in the stock market.
Reality: The stock market is only for people with money to gamble. People with debts and small savings should not be in the stock market. The former should pay the debts, including their mortgages first. The latter should wait until they have substantial savings before they decide to risk a small amount of their assets in the stock market.
The stock market game is rigged against the average small investor. With the way accounting rules and etc are these days, there are lots of ways that corporations can hide important information. Just ask some of the Lehman’s stockholders about that.
Lie the Fourth:
.
.
.
.
.
.
Yeah, I feel bad for those who were taken in, particularly for charities that lost their funds. But no worse than for those who lost their 401Ks or their pension funds on the stock market, for cities and states that can’t sell municipal bonds, and I feel far worse for the poor, who never had a glimmer of getting to participate in the get-rich-quick ponzi scheme that was a stockmarket that everyone said could have perpetual growth forever.
Madoff may be a criminal, but he’s a criminal in large part because he’s engaging in a particular form of ponzi scheme that we look down upon, one small enough to be called illegal. In general, we’re pretty comfortable with ponzi models -we live, quite happily, in a ponzi economy, one in which the concept of perpetual economic growth is sold, divvied up again and resold. We live in a Ponzi ecology where we borrow constantly against the future to pay for our present affluence.
Is this truly a Ponzi scheme? I think the answer is yes - a Ponzi scheme never really generates new wealth, it simply relies on a constant stream of new money. And since the eco-Ponzi economy relies most of all on reducing the capacity of future generations to live well - because natural resources and associated wealth are already drawn down, I think that it does meet the criteria at both the economic and ecological levels.
Most of us have been putting our money into 401Ks and Mutual funds, and now that money is disappearing - and it is disappearing again, because we live in a Ponzi economy, one in which new funds can, for a while, conceal the bankruptcy of a society that draws down its natural resources and leverages both its ecology and economy past bearing. Thus we get the mantra, as Bob Waldrop wisely observes, investing is saving that we all belong in the stock market:
“Lie the First: Money in the stock market is “savings”.
Reality: Money in the stock market is “speculation”. You buy a stock on the speculation that it will go up and you will sell it later at a profit and in the meantime, maybe get a regular dividend. It can also be considered casino gambling. It is not savings as we generally define the term, since it can be here today and gone five minutes later.
Lies the Second and Third: Everyone should be in the stock market. You can’t afford to NOT be in the stock market.
Reality: The stock market is only for people with money to gamble. People with debts and small savings should not be in the stock market. The former should pay the debts, including their mortgages first. The latter should wait until they have substantial savings before they decide to risk a small amount of their assets in the stock market.
The stock market game is rigged against the average small investor. With the way accounting rules and etc are these days, there are lots of ways that corporations can hide important information. Just ask some of the Lehman’s stockholders about that.
Lie the Fourth:
.
.
.
.
.
.