Doge Branded as Ponzi by Federal Reserve Bank of Minneapolis President

but they don't, if you bought doge at multiple points in its history you wouldn't have gotten anything and would have lost money.

This is just _speculation_, if you call it a Ponzi scheme then buying any precious metal is a Ponzi scheme.

No, the missing part is the actual fraud.

Bernie Madoff for example literally lied about assets under management. Dogecoin is just a digitally scarce ledger, with all there is to know about it publicly and clearly available.

It's not fraudulent, just silly--it was built as a joke after all.

All crypto

>The missing part is just the central administrator.

tether, including the pre-mining debacle

The only way to argue that it isn't but Doge is is based on your subjective opinion of "creating value" but if you take your subjective opinion out of it, they fit the exact same criteria you listed.

This is not correct, since a lot of people hodl. This is 100% buying something that might increase or decrease in value. If it decreases, is it then a "reverse ponzi scheme"?

Actually, we could create a real ponzi cryptocurrency, where older wallets get interest from newer wallets. Or that part of the value regularly gets transferred back to the previous transacted wallet. Now THAT would be a ponzi scheme!

If I'm reading this right, then land ownership is a ponzi scheme?

That said, there are a lot of fascists in the mainstream right now. And the number of swastikas (of a non-religious nature) is the highest its been since about 1945...

https://en.wikipedia.org/wiki/Jordan_Peterson#Political_view...

https://www.nybooks.com/daily/2018/03/19/jordan-peterson-and...

https://twitter.com/jordanbpeterson/status/97594153761910784...

If this happens frequently, surely you could link to a few more instances? I can't find any others.

Is social security a ponzi scheme?

No, the essential element of deception is absent. A Ponzi scheme involves deceiving investors. Doge isn't deceiving anyone. It's upsetting people, especially celebrity establishment types looking to make headlines, but that's not deception.

Naturally when the bubble pops the losers will claim they were deceived. They'll be fools and their claims will be specious but in a world where most 'problems' are self-inflicted they'll find an ample number of said celebrity establishment types to indulge that narrative and invent new regulators and criminalize more things...

Dreary is the word that comes to mind.

The problem with this "definition" of a Ponzi scheme is that any transaction with a future payout directly or tangentially related to people buying into it qualifies. Homeownership is a Ponzi scheme. Employment is a Ponzi scheme. Software is a Ponzi scheme. Investing is a Ponzi scheme. Life itself is a Ponzi scheme. What GP is getting at is there should be a more specific definition that properly identifies the required element of fraud (as defined by the law) in a Ponzi scheme but doesn't demonize mass risk taking and losses that come with it. Very few people being l end up winners any endeavor. Loss alone doesn't make Dogecoin fraudulent anymore then it does the lottery.

1. https://www.linkedin.com/posts/paul-grewal-288978b4_grabbing...

Neel Kashkari: The right pronunciation is pon-zi.

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That title belongs to Emilio Botín, who used to lead Spain’s largest bank and hid several hundred millions in a secret account in a Swiss bank.

Botín is spanish for pirate booty :)

The vast majority of smart contracts seem to rely on a trusted external source for their operation. Others seem not to benefit from the decentralized solution at all.

There is also a serious question of whether the excessive democratization will lead to tyranny of the majority. In the case of Ethereum, the majority has gone along with each of the hard forks proposed so far.

I find the technical aspects of crypto compelling, but I still remain highly skeptical of its applications.

Bitcoin: January, 2009 (12 years, 5 months)

In two more years, we'll be just about halfway there. I think the internet had far more apparent uses at 12 years (2005) than bitcoin has now.

(this is a joke)

They are more like a public utility that is private, but has some amount of government oversight. Controlling the ability to create money is pretty impressive and they can cut people off from that, so that is a lot of power. They can't arrest people or criminally charge people like the SEC can though.

Frankly, the toxicity I've seen, especically from the bitcoin bros, would make the early days of the 'Mac vs. PC' blush (not to mention the WS movement going on now).

But the thing I especially hate is how modding has become weaponized to silence anyone seen as a foe/critic (aspiring authoritarian, much?):

> The thing that gets me is that two downvotes tripped HN's anti-flame/anti-spam filter, and now I can't comment anymore.

For anyone else who may be viewing this, I'll mention something I thought was obvious, but may not have been obvious enough: a lot of the utility is in the stage of being potential. For instance, while Ethereum has the potential to perform that same number of transactions per second as the Visa network, that is something that will be coming with the sharding and rollups I mentioned in my original post.

A Ponzi scheme doesn't require "bigger fools" or really any sort of fool. Many Ponzi schemes start out as honest investment offerings and only turn into fraud when the fund manager starts hiding their losses.

What makes crypto interesting is there isn't one person to point to, but everyone out there promoting it is like running their own ponzi because they only profit by convincing someone to buy in a higher price than them. Also in crypto, you can say bitcoin is going to 1 million and it is taken seriously so how do you this a lie? Also, it might get there in the future. It has to be about why the crypto is going up and that is tricky. Can you lie by omission, because in a ponzi if you don't say how the returns come, is that still a ponzi? If you just say, this is going to the moon, and people believe you, is that a ponzi?

Ultimately, all legitimate returns (investing) come from productive activity.

Gambling comes from ponzi like dynamics. Gambling that the stock goes higher, trading, etc. This is all about returns from other people, not from productive activity of the underlying. I think this ponzi is not illegal as long as there is no lying about where returns come from. Perhaps these activities shouldn't be allowed to use the word investment.

Because it is so hard to think about, I don't think it makes since to call them a ponzi. I think it makes since to explain to people you are gambling, not investing, and it will eventually not be sustainable, but crash back to fair value, which most of crypto's case is slightly above zero. I think with crypto there is a lot of misdirection, fraud, lying, but it is very difficult to prove. The SEC can't even figure out what a security is....

Because crypto has no intrinsic value, predicting crazy prices are ridiculous. It is all based on speculation. Most people know there isn't a company behind it making profits and they know that some people got lucky and bought in way lower than them. This is known. What may not be known is basic financial literacy and people who know better that do not tell the truth because they can make more money confusing and pumping crypto to the moon. Most people who know it has ponzi dynamics do not care, most people like ponzis, know the risks, and still want to play. Crypto makes ponzi games more fair.

I don't understand professional baseball, but if the owner of a team says "my pitchers are the BEST" - I can call "bullshit" on them without actually knowing if his pitchers are the best. It's in his best interest to say his pitchers are the best, even if they are not. He owns the team, and his livelihood is linked to the efficacy of his pitchers. This MN reserve employee has the same link between his livelihood and perceived value in the US dollar.

tldr; the "professional" making the statement is heavily biased.

He gave a completely ridiculous reason why the dollar has value. It's along the lines of "Bitcoin has value because it is scarce and hard to create". It's a non-sequitur. It's also ignoring that 90% of the money supply is not created by the government.

Perhaps he wanted to sanitize the following argument: Each year, there's a lot of people that owe a certain amount of dollars to the US government. If they don't find those dollars, they could end up in jail. This is a valid reason why the US dollar has natural demand and thus is valuable.

> If you think you understand better than a leading professional in the field, you might be the mistaken one.

That's not what I am saying. I'm pretty sure he knows better, but he is lying to you with a straight face. That's part of his job.

Salaries, on the other hand, are negotiated up front and sometimes not re-negotiated for years... In the meantime, the currency is inflating (losing value, prices of everything going up). So by the end of the year, your salary buys you less than what you had negotiated at the start of the year. Some companies offer 2% salary increase per year; this is not enough to cover real inflation. By many accounts, the real inflation is much higher than that; the basket of goods to measure inflation has been manipulated over the years to make inflation seem smaller than it actually is. So even in those cases, employees are losing buying power over time.

Besides, inflation is not a single number. Different items inflate at different rates. Money printing is creating wealth inequality which means that goods which appeal to wealthier individuals (such as real estate and other assets which provide financial independence) inflate faster than goods which appeal to the average person (which merely have survival utility).

The fear of inflation motivated me to purchase a property this year. My mortgage payment will stay the same for the life of the loan regardless of the value of USD.

Hypothetically, wages should also raise with inflation but I suppose OP is saying that hasn't been his experience.

Imagine you open a coffee shop and then some billionaire opens a coffee shop next to yours. Imagine his coffee shop receives a $10 million government contract to provide coffee to the nearby FBI bureau for 1 year... On the other hand, you get no government contracts or subsidies of any kind... You cannot compete! Impossible! He can afford to sell his coffee at a loss to regular customers. On the other hand, you cannot! You cannot compete on price, so you go out of business.

The same dynamics permeate pretty much every part of the economy. A similar story can be told without government contracts (which is entirely funded by newly printed money BTW). Big capital holders have access to cheaper credit and lower tax rates than everyone else; they have an unbeatable competitive edge. It's not merely hard to compete; it's impossible! They can make so much money from big institutions that they can operate their front businesses at a loss! That's why they get all the customers! Because they're subsidized by the money printers.

Big corporations can setup shell companies to take out huge loans at 0% interest and then give each other huge phony contracts to get that freshly printed currency circulating between themselves. This creates huge revenue numbers on each other's balance sheets. If the shell companies go bankrupt, no big deal, just make new ones and repeat! That's what limited liability is for. Always use 'intangible assets' as collateral that way you always have the upper hand over the banks when repo time arrives and they collect your worthless intangibles... Just like the Fed did buying all these intangible toxic assets. All the companies and all the banks behind them are offloading their toxic intangibles onto the central banks which are paying for them by diluting the salaries of average workers through money printing.

The worst part of this is that even if you manage to negotiate up your salary over the years, you will get pushed up into a higher tax bracket. This effect was described by Milton Friedman several decades ago. The system eviscerates workers in countless different ways. It's a kind of slavery which keeps getting worse over time.

Ponzi != Pyramid

I live in a country that doesn't use the dollar. I have a large incentive to persuade the world to use my currency in favour of the dollar.

(It's only the enormity of the task that prevents me taking immediate action)

As David Graeber wrote in “Debt,” “Nixon floated the dollar in order to pay for the cost of a war in which he ordered more than four million tons of explosives and incendiaries dropped on cities and villages across Indochina… the debt crisis was a direct result of the need to pay for the bombs, or, to be more precise, the vast military infrastructure needed to deliver them. This was what was causing such an enormous strain on U.S. gold reserves.”

For the first time in history, the world was in a pure fiat standard. The dollars held by central banks across the globe lost their backing, and there was a geopolitical moment where U.S. dominance was called into question and where a multipolar financial world was a distinct possibility. Adding even more pressure, in 1973 the Arab petroleum exporters of OPEC decided to quadruple the price of world oil and embargo the U.S. in response to its support for Israel during the Yom Kippur War. In just a few years, a barrel of oil rose from less than $2 to nearly $12. Faced with double-digit inflation and declining global faith in the dollar, Nixon and his Secretary of State and National Security Advisor Henry Kissinger came up with an idea that would allow them to keep “guns and butter” going in the post-gold standard era and alter the fate of the world.

In 1974, they sent new Treasury Secretary William Simon to Saudi Arabia “to find a way to persuade a hostile kingdom to finance America’s widening deficit with its newfound petrodollar wealth.” Simply put, a petrodollar is a U.S. dollar paid to a petroleum exporter in exchange for oil. As a Bloomberg report says, the basic framework was “strikingly simple.” The U.S. would “buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.” This was the moment that the U.S. dollar was officially married to oil.

From https://bitcoinmagazine.com/culture/the-hidden-costs-of-the-...

Sure it does that on purpose.

But a purpose as desired by one entity is not necessarily a good purpose for another.

Is it a good purpose for the US government's need of financing their country? Yes.

Good for people who want to save money? No.

So, it's hard to hand-waive around the fact that an official currency, unlike a so-called cryptocurrency, does have intrinsic value because by definition certain units of account do buy you certain goods and even the work of full-time employees.

The Treasury operates the U.S. Mint [1]. That said, most dollars are created privately by banks when they create deposits through their lending. The Fed oversees all of this while also creating dollars through similar mechanisms (albeit higher-powered ones).

> Federal Reserve is not Federal - it is a private bank that mints the dollar

The Federal Reserve was created by an act of Congress. Its leadership is appointed by the President. Its profits remit to the U.S. Treasury. It's a creature of the government in everything but name.

[1] https://www.usmint.gov

That, alone, renders dogecoin unsuited as money. Money is, by definition, expected to be stable, not only to serve its purpose as a store of value but also as a standard of deferred payment.