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The #Stock_Market is a #PONZI_SCHEME EXPLAINED
The #Ponzi_Factor is the most #comprehensive_research #EVER_COMPILED on the #negative_sum nature of #capital_gains—the #money people make from #buying and #selling_stocks.
Unlike other finance books, this book does not assume stocks are ownership instruments.
It investigates the ownership assumption and asks, “Why are #stocks_ownership_instruments if the owners never receive money from the companies they own?”
Most people don't #realize that #profits from buying and selling stocks come from other investors.
When one investor buys low and sells high, another investor is also buying high and needs to sell for even higher.
Companies like #Google, #Telsa, #Facebook never pay their investors. Their investors' profits are dependent on the inflow of money from new investors, which by definition, is how a #Ponzi_scheme works.
History shows that the association between stocks and ownership came through dividends—a profit-sharing agreement between the shareholders and the businesses they owned, which is also why all stocks paid dividends before the 1900s. The idea of non-dividend stocks is a new concept that came about over the past century. At some point, the academics and regulators decided it was okay for companies to issue stocks and avoid paying their investors indefinitely. But their acceptance of this new form of ownership—Ponzi assets—was through tradition (and possibly corruption), but not with any research or logic.
The sad truth is, people in finance do not study history and don’t know the difference between a value that comes from the exchange of money (a cerebral idea) and the money that is being exchanged (a possessable item). The product of this ignorance is a system and culture that treats Ponzi assets as ownership just because they’re printed by a company. It doesn’t matter if the company makes money, losses money, pays nothing, or prints as many shares as they want. If a company prints it, it’s ownership. This kind of shoddy logic doesn’t work in other industries, but it is the norm in finance.
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