Listen now (9 mins) | 89 years ago today the US government moved to end the Ponzi schemes that led to the Great Depression. Now it's time to end the crypto bezzle
I told a friend who was investing in it and trying to get me to invest that it was a ponzi scheme. After 35 yrs in Finance & losing my job when Sandy took over Citibank I knew garbage when I saw it. Making money with a computer program, oh yea, sure. Now why is the Fed trying to cause a recession & make middle class people lose their jobs instead of going after the companies that are price gouging. How will mass layoffs bring down the price of a pkg of hamburger meat? The rich don't like it when the middle class gets ahead so they have to price gouge and force recession. This is pure bs.
thank you for a wonderfully educational piece. i have long been suspicious of crypto currency, thinking it was a ponzi scheme because i had no idea where the money came from, where it went and anything else about it. it's nice to learn from a real economist that i was right to trust my instincts.
Bill Maher recently said he doesn’t understand crypto on his program and essentially said, nobody can explain to him how it works. Mr. Reich you should call him and ask to be on his program. You could explain it to him.
This is a wonderful piece, insightful, informative, fun, important. And thank you for reminding us of the great John Kenneth Galbraith and his wonderful term "bezzle"!
Yes, I have suspected since I first heard of it that 'crypto' was a huge scam. But, for some reaon - greed, I think- some people always fall for get rich quick schemes. The Republican Party has favored 'open market' and deregulation. I hope to hell, the Democrats won't fall for that "too big to fail" crap again. The only time I ever questioned Obama's integrity was when he agreed to bail out Wall Street. We need Glass Steagle again. Only this time it should be really hard to undo. Besides insider trading the other scheme that needs to be criminalized, is buying short where you put in 10 % , then use other people's money to purchase at a 'low price', sell high and "make bundle".
Totally correct. It was all evident from Day One. By 2018 some London builders who were working in my house were bragging about how much they had made in Bitcoin. Ordinary men who usually believe in bricks and mortar and their own solid practical skills. Such scams corrupt all moral sense.
Please Wall Street is controlled by American Oligarchs, look at what Musk did to twitter and its stock! The regular everyday American is controlled by the very few, iie: NRA, Big Oil. I am more concerned about their manipulation of the Stock Market then I am of Crypto. I suggest you look up what a Ponzi Scheme is and look at the Real Estate bubble that is happening again with housing that is inflated.
Bandits can always be heard, “We don’t need no stinking [regulations]!”
I think you are spot on Robert. I have been saying the same. JKG is one of my heroes and his observation on the bezzle also spot on. Interesting if you read the “Pecora Report” and distil the risks it reveals, you find they are cryptos risks today. As I keep on saying there is nothing new here. Great column keep up the great writing. JAS.
Yes! Enter Liz Warren!!!!!!!
They must stop all money flowing into government by lobbyists.
I once read a report by anthropologists that found evidence for a prehistoric tribe carrying an elder with them in their migrations via a travois - a huge expenditure of effort and resources. Why? The anthropologists posited: they were carrying their library. Their map (this was pre-GPS). Their wisdom. Their _memory_. Our culture dismisses anything more than a month old as worthless, practically. We leading-edge Boomers remember the stories our parents told of the Depression, and our own postponed retirements in 2008. But to what avail?
Thanks for the new word: Bezzle!
Thank you Dr.Reich. Most easily understood explanation I’ve ever read.
Makes a lot of sense. Regulations=protections.
I know very little about finance, but I do know something about the history of the ‘29 crash and corporate Dem Clinton and the killing of Glass-Steagal. I do know that in NEw York State the crypto lobby has fought hard to repurpose old fossil fuel plants to “mine” cryptocurrency, and thereby exacerbate the climate crisis.
When will we accept that we have the best democracy money can buy?