
The Stock Market Is a Ponzi Scheme - creolabs
https://medium.com/@timdenning/the-stock-market-is-a-ponzi-scheme-2776f075b67b
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smabie
Like other things, stock have value because other people think they have
value. Even stocks than pay dividends pay it in fiat, which only has value if
other people think it has value. Ultimately, there's not much difference
between stocks that pay dividends to those that don't, when you really get
down to it. I suppose you could make an argument that stocks that paid
dividends in food or slaves would be the only ones that had "non-Ponzi" value,
since these things have value apart from any sort of value other people place
on them. Other items in this category of inherent value might include guns,
ammo, or alcohol.

Perhaps some find it scary that we collectively value some things so highly
that are pretty arbitrary, but I think it's only natural. Abstractions are
core to what we are as a people.

In short, if non-dividend paying stocks lack any value, so do most things in
the world. Also, about Ponzi schemes, there's no real problem if the amount of
capital flowing in increases at an exponential rate. In the last hundred
years, this exponential inflow has not been a problem, so things have worked
out pretty well.

Though, in regards to the voting rights, I do think we'll see the end of
ridiculous supervoting shares, at least for awhile. After WeWork, I think the
paradigm has shifted.

~~~
rumanator
> pay it in fiat, which only has value if other people think it has value.

That's not correct. The value of fiat currency is pinned to the production
output of an economy due to the fact that taxes are exclusively paid with it.

~~~
smabie
Yes, the people in the government assign it value. How is that different from
what I said?

~~~
rumanator
> Yes, the people in the government assign it value.

No, they don't. At most "the people in the government" set rules that define
the conversion rate between the domestic product and your contribution, which
is expressed in fiat currency. No one states on a whim how much a unit of
currency is worth. The process is not arbitrary. The only parameter that's
arbitrary is the percentage of your anual production that you are obliged to
pay the state.

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neximo64
Step 1)

Sell your Google to me for $1.0.

Step 2)

Use board to increase dividends to me to 80% of cash flow.

Step 2) (Other party)

Whoops, stocks do have value even if they don't pay a dividend.

Article debunked.

