Lee
Camp speaks with Tan Liu about his revealing book The
Ponzi Factor,
where Liu exposes all the big fraud of the stock market. Liu
explains
why the stock
market,
especially today, in the era of financial capitalism, is the purest
definition of a Ponzi scheme:
The
issue, of course, is profits from stocks and what makes a stock price
move, is not the earnings and growth. It is actually money from
another investor. Now, is there a connection at all with respect to
earnings and growth and this price movement? Yes, it's called a
speculative connection. It is not a legal one. It is not a
logical one. It is not a definitive, or, a mathematical one.
The SEC
defines three basic features of a Ponzi scheme:
One, it
is an investment scenario.
Two, the
investment profits come from other investors.
Three,
the investors think the profits come from somewhere else.
What we
can clearly observe every single day, every single moment the stocks
are trading, is an event where the stock seller - an investor - sells
it to another investor, taking some capital gains profit - if you'd
lucky.
So, we
have an investment scenario, we have profits that come from other
investors, and those investors who are selling it, they think the
money comes from somewhere else, like the growth of the underlying
company. So, we have an event that we can witness every single day
and we have a definition of a Ponzi scheme. The event matches a
definition. Therefore it is a Ponzi scheme.
So, here
is how the big companies are playing safe because they don't risk
anything since the stock price is actually detached from their real
assets and profits, but you are risking your money in a purely Ponzi
scheme.
And here
is how some jackals are getting away with it with a lot of real money
in their pockets, while the rest micro-investors (the vast majority)
are losing their money, especially after the burst of the bubble and
the eruption of another big crisis.
Yes,
this is not just financial capitalism. This is casino capitalism,
which is worse than the ordinary casino because the game is 100%
rigged.
Comments
Post a Comment