Ponzi scheme and Private Banking
Posted: Thu Feb 27, 2014 7:40 am
While playing with my circular ponzi stock scheme, I found sometime quite interesting. My ponzi company although did nothing, but it sort of became the private bank for other AIs.
Since I use issuing stock to raise some funds, and my stock price always increase overtime, AIs love buying my stock, every single one of them. In a way, their cash is actually "stored" in my "stock", like a bank deposit and accumulate "interest" (price increase). Also since its price is so high, there is always enough stock left for future purchases/deposit.
On the other hand, I notice that some AIs were not doing well in business, but none of them went bankrupt or borrowing any money. They simply sell my stock they owned and stay afloat. So my stock acted a lot like real deposit where you can put money in and withdraw with guarantee interest payment.
This got me thinking that a bonds market in a similar setup could work in theory. Where the original banking business in real life, with gold-smith and partial reserve policy, is doing something ponzi-scheme-like as well. They received gold coins deposits and issued "bank note" far exceeded the depository. And before bank regulations were common place, banks do go bankrupt like ponzi scheme style. After liquidated, they usually had no actual assets left.
But I imagine it's also why private banking is not currently implemented. Too much of a risk to generate similar scheme and crash the entire balance.
Since I use issuing stock to raise some funds, and my stock price always increase overtime, AIs love buying my stock, every single one of them. In a way, their cash is actually "stored" in my "stock", like a bank deposit and accumulate "interest" (price increase). Also since its price is so high, there is always enough stock left for future purchases/deposit.
On the other hand, I notice that some AIs were not doing well in business, but none of them went bankrupt or borrowing any money. They simply sell my stock they owned and stay afloat. So my stock acted a lot like real deposit where you can put money in and withdraw with guarantee interest payment.
This got me thinking that a bonds market in a similar setup could work in theory. Where the original banking business in real life, with gold-smith and partial reserve policy, is doing something ponzi-scheme-like as well. They received gold coins deposits and issued "bank note" far exceeded the depository. And before bank regulations were common place, banks do go bankrupt like ponzi scheme style. After liquidated, they usually had no actual assets left.
But I imagine it's also why private banking is not currently implemented. Too much of a risk to generate similar scheme and crash the entire balance.