Your Questions About Stock Market Is A Ponzi Scheme

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David asks…

Did the economy collapse because people lived beyond their means, or were people living beyond their means?

because the economy was collapsing? I’m talking about the real, physical economy – our capital base – not the GDP figures. GDP contraction generally follows physical collapse, as consumption expenditures are very slow to respond to exogenous factors.
OK people – let me try again:

Did Americans behave irresponsibly because they are innately irresponsible, or is the appearance of irresponsibility a result of too little real income (in addition to unbridled speculation, Fed money-printing, etc.) due to the collapse of physical infrastructure and the export of our capital base to East Asia?

Justin answers:

…the economy collapsed because of unregulated financial and investment markets. This created what is essentially a defacto ponzi scheme within the financial and investment markets…

The value of stocks, that were essentially rolled up securities consiting of risky loan products, were overstated to investors…..and when the bubble burst a massive market correction took place.

I’m sorry,…but i’m still of the belief that a standard 3/2 home shouldn’t be beyond the means of a family who has two full time working adults….though now it clearly is due to the financial sector meltdown.

If an average home is beyond the means of the average family….then the American dream is dead.

Sure some people purchased homes they couldn’t afford…. But they did so with the encouragement of an unregulated lending sector. They should never have been approved to begin with… .however the vast majority now suffering from this mess didn’t go beyond their means at the time, they were in fact responsible, …it’s just that… Now the means of average income earners are much smaller.

Thomas asks…

Historically,have MOST “investers” who invest in stock markets .LOST most of their money eventually?

1929..was mostly just a large ponzi scheme? how about recently in 2008?
the Bear Stearns sell off in 2008..being one good people on “Business News Channels”..such as CNBC..(Jim Cramer)..were even telling people to NOT SELL their Bear Stearns stocks…while the sell off continued..including THEIR own selling of the stocks at a high price ?

it is basicaally based on the profits off of others investments? kind of like some type of card game?

Justin answers:

Most people who put money into stocks do so either via mutual funds of buying individual companies. Mutual funds are cash machines for their operators and not the investors. A careful look at mutual fund results reveals few make money for the investors. So if one STUDIES stocks and invests carefully one can make money. FEW people are equipped to do this.

Donald asks…

How would you describe?

a)How would you describe the economic policies of the Harding, Coolidge, and Hoover administrations?

b)Compare and contrast the actions by FDR during the first term to revive the American economy. In your opinion, did his policies reflect a continuation of the status quo or a clean break with past administrations?

Will you please help me on my essay.

Justin answers:

The policies of all three were pretty much ‘hand’s off’ until after the stock market crash in late 1929 during Hoover’s term.

Harding’s reaction to the recession of 1920-21, which was brought on by several factors: High unemployment brought on by both the returning soldiers from WWI trying to find jobs, and the lag between the time it takes to convert high wartime industrial production to consumer production, and one that I never see cited but was crucial: The effects of the great Spanish Influenza pandemic worldwide that killed millions and restricted travel and trade. The Harding administration did very little in the way of government intervention to ‘kickstart’ the economy, instead letting the marketplace correct itself, and the result was one of the fastest recoveries on record.

The 1920s that followed were pretty much good times. “The Roaring Twenties’ was the catchphrase for the decade. Calvin Coolidge’s famous quote, “The business of the country is business,” accurately reflects his view: Get government out of the way.

Government isn’t really needed to ‘fix’ things when they go wrong. What’s needed is common sense. Common sense was nowhere to be found when people were allowed to heavily leverage themselves with investments of as little as five percent of their own money into stocks. When the market took a sudden dip in 1929, these leveraged individuals and institutions couldn’t survive the margin calls that came in, and panic swept the markets. We didn’t need a whole list of new government regulations to fix it. All we needed to do was use common sense and say, “Hey, people, this was stupid. From now on, if you want to buy a hundred shares of stock, you have to have the money. No more controlling a hundred shares with the cost of five.” The market could have done that by itself, and if it didn’t, then it would make the same mistake again – and pay again. That is exactly how the REAL world is supposed to work. Make a mistake and learn from it, or don’t, and suffer the consequences.

Hoover’s mistake was in trying to do too much with government programs. He made things far worse.

FDR did the same thing, but on a much larger scale. And it did NOT work. We are STILL paying for it. FDR’s Social Security system is nothing but a giant Ponzi scheme. Those who put into it early did OK, but those who are putting into it now will lose when the whole thing collapses.

FDR’s other, often vaunted ‘rescue’ schemes were failures. The depression lasted all throughout the 1930s, even worsening again for a time in the recession of 1937. Unemployment at the start of WWII was 20%.

Of course, Roosevelt’s actions were a clean break with the ‘hand’s off’ view of the past. FDR’s philosophy can be summed up by this quote he never made but is true nonetheless: “The business of the country is government.”

We are repeating the same failed policy under Obama. Grow the government at the expense of private enterprise. Only it’s going even farther than that. Gradually take over business by ‘bailing them out’ with taxpayer money, which then gives the government power over those businesses. And that’s where freedoms are lost, when government controls production.

It’s all about power. FDR tried to pack the Supreme Court by growing the number of justices from nine to as many as fifteen. He didn’t like it because conservative justices ruled that some of the things he did were unconstitutional – like requiring, through Congressional legislation, that all privately-held gold be turned over to the Feds, dollar for dollar. Well, a gold $20 piece was worth a lot more than $20 in US paper currency in 1933, the year the right to own gold was taken away from Americans (it wasn’t restored until 1975). FDR won that decision, 5-4, but the close vote spurred him to propose that judges (conservatives were the target) that refused to retire at age 70 be allowed to stay – they serve for life, as you should know – but in order for ‘new blood’ in other words, yes-men, to be brought in, he could appoint one new justice for every post-age 70 justice, thereby expanding or ‘packing’ the court with his own Democrats.

FDR failed in that massive power grab. What’s going to happen now with Obama’s and Pelosi’s and Reid’s massive power grab?

I don’t know. The hard-working people of American business, in spite of the imperfections of capitalism, have always overcome temporary fallbacks to prosper again. I’m very worried that too many Americans have now bought into the idea of getting stuff from the government to give it up, and that we are going to become a socialist country.

Paul asks…

Do many people in Britain invest somehow in the stock market? (or why it is not like the USA in this regards?)?

when began “stock investing” by average people or people with higher paying occupations?

how started and are “mutal funds” or other such things..really “ponzi schemes” in themselves? why people seem to never learn? as all this began even BEFORE 1929? or when was the first big fall out in astock market“…where it took people’s savings?

Justin answers:

There were probably many old scam like schemes in operation centuries ago (people have always been greedy) but the first registered that I can think of was The Darien Scheme which virtually made Scotland bankrupt in the late 17th Century and was possibly the reason why the big bugs of the day accepted English bribes to sign up for that bit of paper called the Union of Parliaments in 1707.

Was it a Ponzi scheme. Well it wasn’t called that then but it does sound a bit odd that it was set up by William Paterson, a Scot, who was somehow so enraptured by England that he also founded the Bank of England.

And then there was the other Scot John Law who is sometimes regarded as the founder of The bank of France and paper money…….

And then there was a Scots guy called Brown who sold off most of Britain’s Gold reserves when it was $200/oz and watched it climb to almost £1500/oz. Well it wasn’t his own money so what the heck!

Also springing to mind a day later than above. There was the South Sea Bubble around 1720. Google South Sea Bubble for details.

Charles asks…

Is our nation run by complete crooks?

Bernard Madoff arrested over alleged $50 billion fraud

NEW YORK (Reuters) – Bernard Madoff, a long-time fixture and powerful adviser on Wall Street, was arrested and charged on Thursday with allegedly running a $50 billion Ponzi scheme, U.S. authorities said.

The former chairman of the Nasdaq Stock Market who remains a member of Nasdaq OMX Group Inc’s nominating committee, is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he founded

these people steal so much more than they can ever spend

do they just get off on ruining people’s lives?

Justin answers:

You right…greed is very contagious…..especially in those who see money

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