(Best read after Part I.) It may be tempting to view crypto-fueled Ponzi schemes as anomalous with respect to capitalist economies. I want to argue a contrary point: that Ponzi schemes are as normal as any aspect of Capitalism. The mathematician Benoit Mandelbrot wrote about something called “fractals.” I read one of his books years ago. Going from memory, a fractal is a pattern that mimics a larger shape from which it branches out. Here is a simple example:
This is very interesting, Max. I have two questions.
1) is there a mistake in this paragraph?
“Governments with floating debts, corporations with floating issues of commercial paper, and banks are typically hedge units.” It came after your description of speculative units, so it seems like governments and banks are speculative units, not hedge ints.
2) an LBO deal predicated on the perception that the company’s sock price companies doesn’t reflect the value of its assets would buy up the shares with a lot of debt and a sliver of equity, intending to pay down the debt by selling off the assets. If the analysis is correct (and there isn’t a big market disruption of some kind that prevents them from selling off the assets and paying down debt in the time frame planned, the equity holders should be left with far more money than they put up, after the debt is repaid.
Cryptoworld is beautifully designed to sucker young men. It purports to be based on an arcane technology, so its adherents can feel smart, even if they're not. It purports to be anti-establishment, so its adherents can feel hip, even if they're not. It overtly purports to be a Ponzi scheme, so its adherents can feel predatory, even if they're chumps. It is on the borderline of legality, so its adherents can feel raffish, even if they're dweebs. A less sympathetic group of victims is hard to find.
My only problem with crypto is that some of the victimizers make money out of it.
This is very interesting, Max. I have two questions.
1) is there a mistake in this paragraph?
“Governments with floating debts, corporations with floating issues of commercial paper, and banks are typically hedge units.” It came after your description of speculative units, so it seems like governments and banks are speculative units, not hedge ints.
2) an LBO deal predicated on the perception that the company’s sock price companies doesn’t reflect the value of its assets would buy up the shares with a lot of debt and a sliver of equity, intending to pay down the debt by selling off the assets. If the analysis is correct (and there isn’t a big market disruption of some kind that prevents them from selling off the assets and paying down debt in the time frame planned, the equity holders should be left with far more money than they put up, after the debt is repaid.
Is that speculative?
Cryptoworld is beautifully designed to sucker young men. It purports to be based on an arcane technology, so its adherents can feel smart, even if they're not. It purports to be anti-establishment, so its adherents can feel hip, even if they're not. It overtly purports to be a Ponzi scheme, so its adherents can feel predatory, even if they're chumps. It is on the borderline of legality, so its adherents can feel raffish, even if they're dweebs. A less sympathetic group of victims is hard to find.
My only problem with crypto is that some of the victimizers make money out of it.