jerryk on Nostr: The basic concept of the Ponzi scheme, is that there is no means of producing capital ...

The basic concept of the Ponzi scheme, is that there is no means of producing capital inherent in the scheme, other than investing more money in the scheme itself. It is essentially non-productive in nature. Now, this seems simple enough, really. Some things are productive, others are not. Growing crops is productive, it produces food for people, people need food. On the other hand, one shouldn't throw good money after bad. Don't invest money in something that isn't productive. In the case of the original Ponzi scheme, as practiced, money is invested, but nothing is produced, the only source of funding is finding further investors, to produce further dividends.

However, the concept of a Ponzi scheme needn't be quite this simplistic, and in its normal application, isn't quite this simplistic. For example, Charles Dickens wrote in Martin Chuzzlewit (1843), some time before the original "Ponzi scheme", about insurance agents as being in a rather similar line of endeavor. Of course, you could rather easily argue that all insurance companies are in this line of endeavor, the Ponzi scheme -- simply funding insurance payouts from other insurance investors, never producing anything -- however, the insurance companies generally do have a large capital, sufficient to pay off all likely claims. If not, they inevitably must go out of business.

How far can the concept of the Ponzi scheme be generalized? What is "true production", as distinct from just shuffling money around? Banks don't really produce anything, they just shuffle money around. No bank investors, no bank, period, they have no real "product".

Even where there is a product, how much is the product really worth, if anything? The "Tulip bubble" in the seventeenth century is a prime example of this, when specific types of tulip bulbs were selling for astronomical sums for a time, before the market collapsed completely.

What about "health care"? How competent are doctors, really? Are they really selling "health", or are they merely selling an illusion of competence, a mere "bedside manner", and little else? As for lawyers, enough said?

These days, there is much interest in Elon Musk's transformation of "junk bonds", into "high yield bonds", a transformation which looks a great deal indeed like the original Ponzi scheme. There is no immediate product of value, certainly. There is the long term prospect of all kinds of products of value -- the conquest of all of outer space, no less! However, there is no clear method to get there, unless we consider the "scientific method" to be a true guarantee of progress, which is dubious indeed.

Is the "scientific method" itself a Ponzi Scheme? Or is science just a religion? Are all religions, actually Ponzi schemes? Isn't the promise of perpetual bliss in an eternal afterlife, in return for unlimited devotion and contributions, the ultimate Ponzi scheme, where you give everything, are promised everything, and get nothing, ever?

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