Air-money
- Thread starter SnickerSnack
- Start date
AeroJonesy
Diabloii.Net Member
Re: Air-money
Nah. Mod is winning. VD is slowly becoming more comprehensible.
I actually came back to this thread after reading this article:
http://news.yahoo.com/s/ap/20090109/ap_on_bi_ge/madoff_false_profits
Apparently quite a few of Madoff's investors still ended up making money. They just didn't make as much as Madoff was telling them. So the money Madoff said was available really wasn't. That's the real "air money".
Look into it a bit deeper, though, and it's no different than the banks Mod and VD are worried about. Madoff took money from people, invested it, and counted on that investment to do well enough to cover the amount of money he said each person had earned. Now for his scheme to work, he has to have enough to pay out to each person that actually requests to get their money. He's only screwed if all the investors want their money at once (because he actually doesn't have that much). So how is that any different than a bank? Banks don't carry enough assets to cover everyone if there is a run on the bank. Their money is out and invested, just like Madoff's. And some banks were likely even invested in the exact same securities!
Nah. Mod is winning. VD is slowly becoming more comprehensible.
I actually came back to this thread after reading this article:
http://news.yahoo.com/s/ap/20090109/ap_on_bi_ge/madoff_false_profits
Apparently quite a few of Madoff's investors still ended up making money. They just didn't make as much as Madoff was telling them. So the money Madoff said was available really wasn't. That's the real "air money".
Look into it a bit deeper, though, and it's no different than the banks Mod and VD are worried about. Madoff took money from people, invested it, and counted on that investment to do well enough to cover the amount of money he said each person had earned. Now for his scheme to work, he has to have enough to pay out to each person that actually requests to get their money. He's only screwed if all the investors want their money at once (because he actually doesn't have that much). So how is that any different than a bank? Banks don't carry enough assets to cover everyone if there is a run on the bank. Their money is out and invested, just like Madoff's. And some banks were likely even invested in the exact same securities!
SnickerSnack
Diabloii.Net Member
Re: Air-money
I'm going to have to take some time (weeks, months?) to digest this. Maybe I'll necro the thread some time.
Come Tuesday, I'm going to be trying to explain very basic math as well as trying to absorb math that is anything but basic, so I don't expect to put much thought into this for a few months.
Thanks for the interesting ideas.
I'm going to have to take some time (weeks, months?) to digest this. Maybe I'll necro the thread some time.
Come Tuesday, I'm going to be trying to explain very basic math as well as trying to absorb math that is anything but basic, so I don't expect to put much thought into this for a few months.
Thanks for the interesting ideas.
Re: Air-money
Take your time. Key thing to to keep in mind is that fractional reserve banking is a system that could work in theory if production always outstrips debt accumulation, and banks were more accepting of other things as payment. But in practice, things are quite different. People use credit irresponsibly because of the lures of fake wealth and projecting an image of success (among other things), not all debt is used to produce (buying homes, for example), and a host of other factors. And, I'd strongly encourage you to consider the consequences of this kind of system, government interference, and central banking. Think you'll find it quite fascinating. Get back via PM or something when you find the time to think about it. Good luck.
Dondrei
Diabloii.Net Member
Re: Air-money
I don't get it... what I read said it was a pyramid scheme. Specifically, a "Ponzi scheme" (to Americans).