Stock Market: Is it a Legal Ponzi Scheme?

Stock Market: Is it a Legal Ponzi Scheme?

Recently you must have heard about Bernard Madoff. Madoff did largest financial scam of the century. The Investment firm he was running was a large ponzi scheme. The fraud was of $ 65 Billion. Now, those who don’t know anything about the ponzi scheme, let me explain you that What is a Ponzi scheme?

A Ponzi scheme is a scheme in which the money of the new investors is given to the old existing investors as a profit. This is illegal in terms of government laws worldwide because you have to do a business with the investors’ money. You can not give the money of the new investors to the existing investors as a profit. And to keep the ponzi scheme alive, the flow of new investors MUST be keep flowing. And the day new investors stop joining the ponzi scheme, it busts and the scam reveals. Because the scheme fails to pay money to the existing investors from the day, the new investors stop joining the scheme.

Now, just tell me that What do you think about the stock market? Isn’t it a Legal Ponzi Scheme? Every year, the money from literally millions of new investors should flow into the Stock market otherwise, how will the existing investors make money?

Now, think in different way. Let us discuss about the Pension Plans and Social Security schemes in USA. Isn’t they Legal Ponzi Schemes? This is because how the Social Security and Pension Plans give back the money to the existing holders? Well, it’s simple. From the money of new account holders.

If new people stop joining Pension Plans and Social Security Schemes than what will happen? How will these schemes give the money to the existing people who retire? Thus, to keep Stock market and social securities schemes alive, it is necessary that money from the new Investors keep flowing into these schemes.

I call Stock Market as a Legal Ponzi Scheme. Because the new investors have to keep investing their money in the stock market. Otherwise How will the existing investors make their money?…!!!!

What Do You Think?….!!!!