|
|
|
|
|
|
by dingaling
9 days ago
|
|
|
> A pyramid scheme can run out of people to keep it going And then you describe how the secondary stock market requires 'fresh blood' to whom to sell stock to cash-out. It's precisely a legalised pyramid scheme that always needs someone to come in at the bottom hold the bag to let someone else cash-out. In turn they need someone to come in 30 years later. That's exactly how a pyramid scheme works. |
|
|
The entire economy is a pyramid scheme: the expenses of some people (shelter, food, clothing, entertainment, etc) are the income of other people (landlords/mortgages/property taxes, farmers/grocers, etc). It's why, during economic downturns, personal virtues (saving) can become vices from macroeconomic perspective: if everyone is saving, no one is spending, and so producers/suppliers lose their income (and generally start laying people off, which causes more saving / less spending).
At any given point in time, if no one spends, then no one has income.
This was the 'innovation' of Keynes in the 1930s: use government spending to 'induce' demand to get the cycle going again:
* https://archive.nytimes.com/krugman.blogs.nytimes.com/2015/0...
For a stocks point of view: if no one is currently saving, then those that need income will lose it. At any given point there are folks who need to save/buy and those that need to spend/sell.