Your Questions About Is The Stock Market A Ponzi Scheme

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Richard asks…

Don’t you love living in America where ponzi schemes are legal?

Have you noticed that the stock market resembles exactly what a ponzi scheme is. The stock market keeps a select few people earning billions in profit a year, trickling down like a pyramid scheme to the latest investors who get shafted. Best of all it is legal, and controls the economy so tightly it causes recessions / depressions.

Justin answers:

Yeah, no, soon as I finish school I’m moving to another country.

Donald asks…

Why did the baby-boomer generation in the UK decide to enrich themselves at the expense of their children?

Why did they decide to purchase buy-to-let properties, thus pushing up the price of housing to ridiculous levels, ensuring that their children could never afford to buy property? Why did they decide to have final salary pension schemes for themselves, but defined contribution schemes for their children, thus subjecting their children’s pensions to the vagaries of the stock market whilst enjoying a lavish retirement to be paid for by their children (baby boomer’s pensions are on average a shocking 108% higher than their contributions)? Why did they decide to have free university education for themselves, but subject their children to crippling levels of debt in order to gain a degree?

Justin answers:

The baby boomers are only partially to blame. It was the conservative policy of selling social housing stock at knock down criminal prices, and copying america by encouraging home ownership. The tory trick was to rig the market by not replenishing social housing stock, therefore creating a demand on limited property for this island. The baby boomers were simply led by GREED and the tories duly obliged. Tory capitalism is built on a ponzi scheme unless we break the cycle, we shall perpetually experience, a RECESSION. This time they have created an almighty GLOBAL RECESSION with no end in sight

Robert asks…

What is the investment scheme like a Ponzi?

Simple version is the first day I contact 1000 investors and tell half that stock market will go up tomorrow and half that it will go down. Next day I do the same, but only contact the ones who got the correct prediction from me the first day. I continue until I have a small group who have experienced that I am always right and I get them to invest with me. What is that scheme called?

Justin answers:

That would be the pre-lude to a confidence trick, the establishment of trust. I don’t think it’s considered a scheme of itself but simply part of other schemes.

Mighty labourious way of doing it though, after 9 iterations you have a track record of 9 correct calls in a row with one mark out of the initial 1,000 marks. I suppose if you keep pushing a scam with each iteration then it would be worthwhile. You’ll still need a scam to push.

Charles asks…

How can those OWS be allowed to spoil Wall Street’s chances of helping young people play the stock market with?

their Social Security withholdings? ……….They just need to watch out for Ponzi schemes, then they’ll be ok.

Justin answers:

Lol. Yea it’s the risky government bonds that you have to watch out for.

Thomas asks…

I am looking to invest in the stock market so I have no exposure to the United States.Where do you recommend?

After watching the 1999 collapse and now a near Depression because of the Banks running a giant Ponzi scheme I believe I would be better served with other countries. Any suggestions would be appreciated

Justin answers:

In 2001 and 2008 all world markets crashed. Some crashed harder than others and some have recovered more than others since then, but all are down significantly from their 2007 highs.

A large part of the reason for the 2008 crash was global banks (Citi, UBS, etc). Every market in the world was exposed to issues stemming from the ill advised investments of these large banks. It will be difficult to avoid banks completely no matter where you invest.

After all that, IMHO, the US is still the best market to invest in. It has the most open and liquid markets in the world. Outside the US, markets in Europe might be interesting (like London, Paris, or Zurich) but they will also be highly correlated to the US markets.

You might also try a World Markets ex US mutual fund (an index of the world markets without the US market included). I think Vanguard has a fund and an ETF based on this index.

Ken asks…

Does the current financial situation spell doom for the insane idea of privatizing Social Security?

As terrible as the current Social Security system is, can you imagine what would happen in a financial situation like this if those funds had been invested on the private market?

Now that things are changing, are any public figures still convinced that people can be convinced to turn their retirement money over to corporate criminals? Is anyone still pushing this Ponzi scheme?

Is it all over for the privatization lunatics?

Justin answers:

The government’s program is pretty much guaranteed to fail before I am old enough to see any of it.

So I would rather have the risky stock market than the guaranteed failure of the government program.

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