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Ponzi capitalism
By Frank Scott
By Frank Scott
Charles Ponzi was criminalized in the 1920s for a pyramid scheme whereby he duped people into investing in international postal coupons (most of which were non-existent) and promised a 40 percent return on their money in 90 days. The profit some realized resulted from unprincipled capital accumulation. Just like what the market does when it sells what it calls derivatives now, Ponzi’s investors derived value from other investors, until the number of gullible people declined once the ruling class squelched his scheme before their own schemes were seen to be much bolder methods of producing money out of thin air. The credit creation which has supported our consumption binge for many years now is merely an updated, far more vast and dangerous expression of Ponzi’s hustle, carried to global extremes.
Purists can deny that the present shakeup in the home mortgage sector is anything like a Ponzi Scheme, because an actual product exists: a home. But rare is the buyer in America who sees real estate simply as a procedure to acquire shelter. Rather, it has become a money making proposition in which the commodity, and especially the speculative paper that is its tenuous foundation, changes hands often, sees its value fluctuate, and all with no more than religious faith in a steady stream of new investors to buy the paper.
Purists can deny that the present shakeup in the home mortgage sector is anything like a Ponzi Scheme, because an actual product exists: a home. But rare is the buyer in America who sees real estate simply as a procedure to acquire shelter. Rather, it has become a money making proposition in which the commodity, and especially the speculative paper that is its tenuous foundation, changes hands often, sees its value fluctuate, and all with no more than religious faith in a steady stream of new investors to buy the paper.
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