Our National Pyramid Scheme
April 13, 2009, 11:31 am
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Almost involuntarily, my mental model for the financial bubble & burst, and ensuing crisis, is that of a pyramid scheme. The government’s responses and ‘programs’, in particular, resemble nothing so much as attempts to Keep The Pyramid Scheme Going. (I don’t know how they’d be any different if that’s what they were.) I think the below protest photo I grabbed from Calculated Risk says it pretty well, & needs no further comment:

It’s pretty depressing to think that the entire financial system may be nothing but a slo-mo, slightly more tightly-controlled pyramid scheme. But that seems to be the conclusion I’ve come to.

I am always on the lookout for counterevidence to this depressing proposition. Haven’t seen any in at least the past year.

2 Comments so far
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Had exactly same argument while visiting family for the holidays;
after massive booing directed at Madoff I dared to suggest that Social Security is built on the same pyramid principle. Naturally, I was immediately told that “after-war generation” deserved undying respect and support, and that “we worked all our lives, since 17, unlike you slackers!”, and that without State care people would be living on the streets – because of cold-hearted egotistical rightwing nuts like me.

Boy, am I glad to be home, at last.

Comment by ETat

The crazy thing there is that Social Security is OBVIOUSLY a pyramid scheme, by construction, yet people still dispute that. So if I tried to claim to the average person that, say, our housing-finance system is a pyramid scheme, I’d have a really uphill battle.

Comment by Sonic Charmer

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