[HN Gopher] Bernie Madoff has died
___________________________________________________________________
Bernie Madoff has died
Author : cwwc
Score : 222 points
Date : 2021-04-14 13:40 UTC (9 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| dukeofdoom wrote:
| Were the cameras off, like in Epstein's jail strangulation?
| [deleted]
| anoonmoose wrote:
| From Wikipedia:
|
| "On June 22, 2009, Sorkin hand-delivered a customary pre-
| sentencing letter to the judge requesting a sentence of 12 years,
| because of tables from the Social Security Administration that
| his life span was predicted to be 13 years."
|
| Letter was submitted 11.81 years ago.
| willis936 wrote:
| Now _that 's_ an actuary.
| devops000 wrote:
| The same day of Coinbase IPO.
| macjohnmcc wrote:
| I learned a few years ago that I actually worked closely with one
| of the two programmers who worked with Madoff and was part of the
| "Madoff Five" the year before he started with Madoff. I feel the
| judge went too easy on the programmers involved as there is no
| way they did not understand what they were helping to
| orchestrate. I also worked closely with another programmer a
| couple of years later who wound up being a drug kingpin. I hope
| that it ended with those two!
| lordnacho wrote:
| What were they coding? Sounded to me like nothing at all was
| going on inside.
| askesisdev wrote:
| They built software to create a fake history of the trading
| and also imitated certain software from other companies and
| regulators so the customer could check the trades were real.
| There is a decent book on Madoff called 'Wizard of Lies'
| macjohnmcc wrote:
| Yeah and knowing the programmer personally at the time I
| have no reason to believe he would not have known what he
| was helping to facilitate. Eventually the two programmers
| asked for their pay to be in diamonds like they were
| working for a James Bond villain and that is not how you do
| if you are ignorant of what they were doing.
| scrubs wrote:
| BM is a special kind of stuck on stupid. In addition, his sons
| Mark and Andrew:
|
| * Mark killed himself in December 2010 on the second anniversary
| of his father's arrest.
|
| * Andrew died in 2014 from cancer.
| jacquesm wrote:
| This is in - very - poor taste.
| beej71 wrote:
| That's too bad. I wanted him to live out his term. Given the
| amount of damage he caused, he has hardly paid his debt to
| society.
| mchusma wrote:
| Doesn't that just cost society more? In actual dollars a 150
| year sentence would cost taxpayers something like $10M
| (apparently prison costs like $81k/year in the US)
| anoonmoose wrote:
| If his example deterred one person from committing the same
| crime, taxpayers may come out ahead anyways.
| Tomte wrote:
| You want a 71 year old man to live out his 150 year prison
| sentence?
| anoonmoose wrote:
| Sure, why else give him a 150 year prison sentence? I am only
| 49% joking.
| s_dev wrote:
| Hopefully he serves as an example to other Ponzi schemers in Wall
| Street. It's rare in the US white collar guys like this die in
| prison.
| vsareto wrote:
| "Look what happens when we choose to catch you"
| mumblemumble wrote:
| Hopefully, but to be blunt, if that model of punition actually
| worked, then the homicide rate would have been lower back when
| gibbeting was still a thing.
| smt88 wrote:
| Financial criminals and murderers are not comparable. Prison
| is like a death sentence to a rich person.
| mumblemumble wrote:
| True, they aren't, but we're not talking about the class of
| crime. We're talking about a particular kind of incentive
| model.
| smt88 wrote:
| The "incentive" for murder is usually that someone is
| angry and not thinking about consequences at all.
|
| Financial crimes are usually slow-burning and almost
| never crimes of passion.
|
| Prison doesn't stop murderers, but that has no bearing on
| whether it stops Madoffs.
| mumblemumble wrote:
| Alternatively, we could look at the empirical studies,
| which seem to indicate that, regardless of the different
| ways one could hypothesize that in some contexts but not
| in others, the reality is that, across the board, making
| sentences tougher has little deterrent effect.
|
| https://nij.ojp.gov/topics/articles/five-things-about-
| deterr...
| JackPoach wrote:
| I believe both of his sons are dead now too.
| [deleted]
| snypher wrote:
| "They call me either Uncle Bernie or Mr. Madoff. I can't walk
| anywhere without someone shouting their greetings and
| encouragement, to keep my spirit up. It's really quite sweet,
| how concerned everyone was about my well being, including the
| staff... It's much safer here than walking the streets of New
| York."
| minikites wrote:
| Putting one of them in prison isn't threatening when we let
| hundreds of others walk around free.
| paulpauper wrote:
| Even 1st degree murderers, serial rapists, and producers of kid
| porn get smaller sentences . I think only serial killers get a
| worse sentence. It goes to show how when it comes to money,
| prosecutors , judges, and juries do not mess around . Lost money
| ruins and harms lives as badly as actual violence. Some of the
| longest sentences are handed out to people who do non violent
| crimes of a financial nature, often because of how the charges
| are stacked (wire fraud, laundering, mail fraud, etc.) and then
| there are multiple counts. SO it is easy to get a very long
| sentence.
| MengerSponge wrote:
| Sounds like I'm gonna have a beer and rewatch "The Other Guys"
| tonight
| Cd00d wrote:
| I don't see the connection. A cursory search of that movie's
| wikipedia page doesn't return anything for 'mado'...
|
| Why?
| ollie87 wrote:
| Guess that Awkwafina song now needs a partial re-write.
|
| Isn't Bernie Madoff dead? He's dead, right?
|
| Nah, that motherfucker not dead, he in jail getting booty-rammed
| by the feds, getting tossed by a dude named Big Ed, in a hotbed,
| eating ramen noodles and crying
| rainyMammoth wrote:
| After watching the movie "The Wizard of Lies", i changed my mind
| if Madoff. He was a prisoner of his own vice and it consumed him
| and killed his whole family
| parenthesis wrote:
| He brings to my mind the man who loses his job, but, too
| ashamed to tell his wife, continues to leave the house in his
| suit every morning, his wife not discovering the true situation
| until the house is foreclosed, at which point it is too late.
|
| A tragic figure, who unfortunately brings down others with him.
| rainyMammoth wrote:
| Exactly. He was not brave enough to stop by himself and made
| everything worse as a result. Sometimes everyone is a victim.
| paulpauper wrote:
| even his son who died of cancer?
| gvv wrote:
| too little too late.
| slibhb wrote:
| I was always fascinated by how violently people felt toward
| Madoff. Madoff reminds me of a character in a Woody Allen movie.
| Martin Landau in Crimes and Misdemeanors.
|
| In Dosteovsky, the perpetrator feels real guilt, confesses, and
| finds salvation in God. In Woody Allen, the perpetrator gets over
| his guilt and lives happily ever after, avoiding punishment. In
| Madoff's case, the perpetrator dies in prison and his family is
| destroyed.
|
| Of the three, Madoff killed no one. In some sense I think he was
| a scapegoat for the 2008 financial crisis. That's not to say that
| he was innocent or that his crimes were insignificant. Only that,
| due to the timing, he became a convenient target for the public's
| understandable outrage over the financial crisis.
| jasonwatkinspdx wrote:
| I think a lot of it is simply there's a lot of frustration that
| crimes like this go on every day. Many people see the top
| levels of finance as all being tainted by fraud, stealing from
| ordinary workers, and this acts as confirmation for that.
|
| Bernie's fraud imploding did motivate several suicides. Not
| exactly killing by his own hand, but he does bear some
| responsibility. We also shouldn't ignore he cravenly focused on
| charities as their legal requirements would give his ponzi
| scheme the longest runway. He also leveraged his reputation in
| the ultra wealthy NE Jewish community to find victims. So
| independent of the common outrage, I can see how a lot of
| people would see this as a particularly ugly betrayal.
| bsanr2 wrote:
| I think the general understanding is that the visceral
| animosity has to do with the nature of the betrayal. His fund
| was shopped around largely to other wealthy people in his
| community; they thought they were making money hand-over-fist
| (particularly for all of the charities and whatnot they could
| have just been funding directly), with an "in" that people
| outside couldn't access. Finding out that Madoff had actually
| lost all of their money wasn't just a hit to their pocketbooks:
| it struck at the solidarity of their community, at their sense
| of self and goodness, at their egos. In short, it stripped them
| of everything that being part of the fund was supposed to
| magnify. It's not just embarrassing, it's devastating; all of
| your psychic and material fallbacks have been wiped in one fell
| swoop. When something like that happens, you don't want to
| admit that you were taken for a fool; you need a scapegoat, and
| you need him to be a demon.
| anoonmoose wrote:
| Of the three, Madoff killed no one.
|
| Also of the three, Madoff was a real person, not a fictional
| character, which is probably where the comparisons start to
| fall apart.
| Arubis wrote:
| I hope this provides at least a little comfort for all those
| whose old age and retirement were ruined for his profit.
| dep_b wrote:
| The scapegoat. The only one who ripped off the rich instead of
| the poor. I would like to see people like Paul Singer die in
| prison, who made the lives of millions of people miserable, but I
| guess it's all legal what he did...
| phpsuks wrote:
| Scamming rich people is not exclusive of scamming poor people
| unfortunately. Poor always, always pay the bill.
| data_acquired wrote:
| To quote another Bernie, there's a fair bit of socialism for
| the rich in the US through bailouts when big corporations
| lose too much money/are too big to fail.
| colineartheta wrote:
| I'm not sure why you're being downvoted, as that's as true
| of a statement as almost anything. This weird,
| hypermasculine obsession with capitalism amongst this forum
| (and tech community at large) just perpetuates injustices.
| data_acquired wrote:
| Haha :) I've been on HN for 12+ years, and yes,
| statements on capitalism don't always go over very well
| (unsurprising given links to YCombinator). Although I
| will say that HN has a wider diversity of opinion on
| quite a range of topics than other tech forums.
| mhh__ wrote:
| Well I don't know about you, but I am merely a
| temporarily embarrassed founder
| bidirectional wrote:
| Madoff had no problem defrauding charities and pension funds.
| Hardly Robin Hood.
| dangerbird2 wrote:
| To be fair, most robinhood-esque folk heroes had no qualms
| about robbing the poor along with the rich, e.g. depression-
| era bank robbers.
| capableweb wrote:
| I'm sorry, but how are "depression-era bank robbers" in any
| "robinhood-esque"? They all did their actions for personal
| gain.
| sokoloff wrote:
| If you're talking about this guy:
| https://en.wikipedia.org/wiki/Paul_Singer_(businessman) I don't
| get any clear understanding of why someone would wish to see
| him die in prison.
| pjc50 wrote:
| I think this is about the "pari passu" saga. It's one thing
| to hound individuals for their debts, quite another to hound
| an entire country - and in some cases there had _already_
| been a creditor resolution which he overturned.
|
| Still I feel that asking him to die in jail for doing legal
| if nasty things is going a bit far.
| [deleted]
| dep_b wrote:
| Argentina was paying off debts when he pushed them into
| default to force a full payout on a debt he only paid a
| fraction for.
|
| The IMF puppet president that got installed after that and
| that paid him off in full doubled the Argentinian foreign
| debt, resetting the economic situation to 2001.
|
| An entire generation will know nothing but a broken country
| and regression without hope for future. People were dying of
| hunger in 2001 and people are dying of hunger now.
|
| But Paul Singer got his 500% ROI.
|
| And read up about what he did in Detroit if you think he only
| does it to some 3rd world countries.
| trasz wrote:
| Tbh this is more of a failure of Argentinian government
| institutions to protect their country against it.
| dep_b wrote:
| And a failure of the US government to protect itself
| against people like Singer.
| spamizbad wrote:
| Madoff was arguably a victim of cancel culture before we had
| coined the term. Punished by woke capital for his whimsical
| approach to finance and investing. A titan cut down by his
| lessers.
| krupan wrote:
| I was wondering how he got into this, did he set out to run a
| ponzi scheme from the get go? Interesting to see that it was not
| like that. He was running an honest fund that ran into some
| trouble during a down turn. He convinced himself that he could
| just fudge things a little, just until the downturn passed and
| then he'd go straight again. Of course he never went straight
| again. Life lessons for everyone there.
| robotcookies wrote:
| Madeoff's claim has always been that it was meant to be a
| temporary, short term thing and he believed he could get
| himself out of it before anyone else realized his fraud.
| JKCalhoun wrote:
| Yeah, that's a weak defense.
|
| I mean, "meant to be a temporary" means he knew it was
| wrong/illegal.
|
| He gets no pass for that.
| lordnacho wrote:
| I remember when this happened, I was running a hedge fund.
| Supposedly he was doing collars (split-strike conversions) to
| make this money, but it just seemed implausible to me at the
| time, since I traded options. I figured he just punted futures,
| nice and easy way to sorta hug the index (I hadn't seen his
| "returns"), maybe Martingale it and get lucky until you're not so
| lucky.
|
| But then it turned out he wasn't doing anything at all.
|
| This was a bit of an insight for me, because I'd been through
| investor meetings, and they ask a lot of things. Mostly the wrong
| things, but they do ask things that you need to actually have had
| a fund to answer, like "who does your audits". So I was pretty
| amazed when it turned out he got away with some DIY audit
| (through a friend?) or something like that.
|
| One thing that did seem to happen immediately was that investors
| seemed to play it safe. Not great for little funds. I think a lot
| of them were spooked by some quite big names getting scammed.
| ajcp wrote:
| > Supposedly he was doing collars (split-strike conversions) to
| make this money, but it just seemed implausible to me at the
| time, since I traded options. I figured he just punted futures,
| nice and easy way to sorta hug the index (I hadn't seen his
| "returns"), maybe Martingale it and get lucky until you're not
| so lucky.
|
| For all I know you might as well be talking about a Rockwell
| Retro Encabulator[1]
|
| 1. https://youtu.be/RXJKdh1KZ0w?t=50
| lordnacho wrote:
| That is a brilliant video, perfectly cromulent.
| cm2187 wrote:
| He also went for unsophisticated (though sometimes with large
| tickets) investors.
| m3kw9 wrote:
| If he wasn't, he was dead man walking
| cletus wrote:
| Here's the one lesson I really want us to all learn from this:
| the only thing the rich fear is prison because prison robs them
| of time.
|
| Fines are just the cost of doing business.
|
| There are many other scandals: the whole subprime disaster,
| pollution from plants and the like where no one went to prison
| and people really should've.
| paganel wrote:
| And if you do end up stealing, make sure to steal from the
| less-off. Afaik nobody has yet gone to prison for liquidating
| an employees' pension fund, for example.
| Applejinx wrote:
| Yet.
|
| Sounds like an aspirational goal to me! Long past time
| somebody did.
| LB232323 wrote:
| The only reason this guy got charged is because he was a plain
| scam artist running everything out of his personal bank
| account.
|
| Unfortunately, the highest levels of financial crime are tied
| to lawmakers and corruption of the highest authorities of white
| collar law enforcement.
|
| It's usually outsiders and smaller operations that get caught.
| Corporations are in charge of a corporate oligarchy, which is
| the United States.
|
| These entities are "too big to fail". They are so essential to
| the economy that the best you can hope for from the government
| is maybe a scapegoat going to a comfortable prison or a hefty
| fine.
|
| TL;DR
|
| Bringing down the largest corporations for crime is like trying
| to arrest the US president for war crimes.
| throwazero wrote:
| > These entities are "too big to fail". They are so essential
| to the economy that the best you can hope for from the
| government is maybe a scapegoat going to a comfortable prison
| or a hefty fine.
|
| Norway faced a banking crisis in the 90s; to solve it, the
| government simply invalidated the shares and took control of
| the bank.[1] The government later reprivatized it - i.e. sold
| new shares - once it was no longer failing.
|
| That seems a pretty okay approach for entities that are too
| big to fail: let the shareholders, not the public, pay the
| price of failure.
|
| (You need a sufficiently strong government to do it,
| obviously.)
|
| [1] https://en.wikipedia.org/wiki/Christiania_Bank
| finikytou wrote:
| that is not the number one learning and I think you are wrong.
| The real powerful and rich do not fear jail. They fear people
| like madoff that targets them.
|
| That is why Madoff ended his life in jail while banks/funds CEO
| in the 2008 are now richer than ever stealing money from the
| poors and taking 0 accountability for the subprime crisis that
| destroyed a whole decade. In my book he was better than any of
| those bankers. He shown to the world that some people are
| smarter than the banks and that they will be severely punished
| if they do not abide by the laws that helps those banks to win.
| obmelvin wrote:
| Oh, please. Madoff ruined plenty of "normal" people's life
| savings. Say what you will about other bankers, but please
| don't try to elevate someone who destroyed the life savings
| of others.
|
| EDIT: Yes, non-profits and pension funds as well. That's not
| taking from the rich. Madoff was not Robin Hood.
| mathattack wrote:
| Many non-profits who invested their endowments with him got
| hurt too.
| finikytou wrote:
| no he did not. 75% of what he robbed was recovered also.
| Wouldnt call it ruining life... if he did steal to "normal
| people" that is to a much smaller percentage than he robbed
| the rich ones. thousands of people that are still in wall
| street today robbed poor people and are still
| trading/working in the industry today. While I am not
| elevating him I am elevating the fact that he rot in jail
| for robbing the rich. Just look at the papers from 2008 if
| you don't believe it.
| bidirectional wrote:
| 75% - opportunity cost - inflation.
|
| If you plan your life around having $1 million in savings
| because that's what your statements from Madoff say,
| recovering 75% of the fraction you put in is pretty bad.
| obmelvin wrote:
| So, it's ok to steal from people as long as most of them
| are rich?
|
| And, it's ok to steal as long as you only steal 25% of
| it?
| finikytou wrote:
| I never said it was ok. I said he is in jail because he
| stole the rich. If he stole the poor he'd be on the
| trading desk of some bank in wall street. Who is in jail
| today for the subprime crisis?
| bidirectional wrote:
| How exactly are sell-side trading desks stealing from the
| poor?
| finikytou wrote:
| I meant Madoff would be free to do whatever he wants. But
| ill bite. Just look at all the robinhood millenials
| getting robbed by Citadel that literally has insider
| knowledge of all the robinhood transactions.
| bidirectional wrote:
| That's not what I'm asking about. They specifically said
| trading desks at banks, Citadel is a market maker.
|
| But what's really you're just parroting baseless
| conspiracy -- Citadel is a legitimate business which
| provides a great service to Robin Hood users. Payment for
| order flow is _very_ good for the retail investor,
| reducing commissions and improving prices, the recent
| episode of Bloomberg 's Odd Lots podcast with Doug Cifu
| went explained exactly how this works, it's a classic
| example of incentives aligning. Also by design no market
| maker gets access to _all_ Robinhood transactions.
| finikytou wrote:
| sure. they dont get access to all robinhood transactions.
| their trading algorithms do the work. if you know a few
| ms in advance the trades you can literaly make money out
| of it. and this should be clearly advertised when getting
| into robinhood.
|
| Your argument that it is to help retail traders to enter
| for cheap into trading is fallacious. It is exactly like
| saying getting into real estate nowadays is a no brainer
| due to low interest loans. even tho the loan means
| borrowing money for 30years and living like a slave to
| pay a rent that the generation before you got in 10years.
| In the same ways FB makes money out of people Citadel and
| Robinhood does it 0 conspiracy there
| bidirectional wrote:
| It's nothing to do with knowing the trades 'in advance',
| they're the ones _doing_ the trades! Market makers like
| Citadel are regulated to improve the prices offered in
| the market place. A stock may trade for $50 on the
| exchange, but Citadel can sell it for $49.50, they must
| improve prices and they do. Part of the reason they can
| do this is that Robin Hood orders are 'safe'. If a huge
| hedge fund comes to Citadel and wants to trade a million
| shares in TSLA, they likely know something Citadel
| doesn't and will rip their face off. That's why Robin
| Hood orders are valuable, luckily, the incentives of the
| retail investor (buying a stock as cheap as possible) and
| the market maker (selling to someone who isn't about to
| pummel them) line up.
|
| If you think Citadel and its ilk are bad, you should see
| the guys they replaced! Market making is as old as the
| market itself, the modern advancements allow commission-
| free trading, massive liquidity and tiny spreads, before
| you'd be paying commission and buying a stock for dollars
| more than you could sell it for. They're good for the
| market and it's a shame this crazy conspiratorial
| thinking (which is never backed up by any real
| understanding) has taken hold of so many people.
| finikytou wrote:
| You re right. they do the trades for robinhood users.
| What do you think they do between the time they receive
| the order and execute it? don't forget that the default
| trade on robinhood has no limit to it. you buying market
| value. now try doing that on millions of users just like
| madoff did playing with the cents.
| bidirectional wrote:
| They make their cents (or less) on the bid-ask spread, as
| do all market makers. They do this while also improving
| the execution of the trade for the end user. Some of that
| spread goes back to Robin Hood via PFOF. Citadel allows
| people to buy stocks for _less_ than they would normally,
| this is an irrefutable fact.
|
| What do you think they're doing in that time? Please be
| specific because I have no idea what part of this
| mutually beneficial, standard operating procedure is
| meant to be a criminal conspiracy. The people losing out
| are institutional investors who cannot access the same
| execution quality as a retail investor, because they
| trade in greater volume and are more likely to be behind
| a market move.
| bobthechef wrote:
| The more fundamental problem is that interest is usury
| and usury is theft. And naturally, the entire modern
| banking system runs on interest (which is probably the
| least egregious of all the wacky financial instruments
| out there). You'll hear nonsense about the opportunity
| cost and risk, none of which have any relevance to or
| rebut the notion that charging interest (as opposed to
| just fixed administrative fees) is theft. Time isn't a
| commodity, so why am I paying you more the longer it
| takes me to pay back my loan?
|
| Is your gold and silver ewes and rams? Shylock cannot
| tell. He makes it breed as fast.
| bidirectional wrote:
| Of course time is a commodity. A (potentially false
| promise of a) dollar in one year is less useful than a
| dollar tomorrow which is less useful than a dollar right
| now.
|
| If you do believe interest is theft and time has no
| value, you can act as a kind of Robin Hood by putting all
| of your money into bonds from Goldman Sachs, the US
| government or whoever you deem the worst perpetrator of
| this theft. You'll _literally_ be stealing from them!
| tartoran wrote:
| If there was only one person orchestrating and solely
| benefitting from the subprime crisis it would be easy to
| put them in jail but there are too many to be put in
| jail, it's the equivalent of 'too big to fail' but for
| people, 'too many to pinpoint blame' type of thinking.
| All these people knew it was going nowhere but they kept
| imflating the bubble because all their peers were doing
| it also and that despite numerous people raising res
| flags at the same time.
|
| Maddoff was a dumb thief, and very cunning indeed but he
| operated in silence. That's not to say the same thing
| about the others who 'gamged up' knowing that in case of
| failure many fingers would be pointed out in too many
| directions.
| blowski wrote:
| I'd be ok if even some of the guilty people went to
| prison. We don't imprison every single drug user.
| toomuchtodo wrote:
| https://www.npr.org/2018/12/23/678238031/for-madoff-
| victims-... (NPR: For Madoff Victims, Scars Remain 10
| Years Later)
| kingsuper20 wrote:
| "That is why Madoff ended his life in jail"
|
| That's an interesting point and probably true. The identity
| of your victim matters as much as the crime. It isn't like a
| serial car thief would receive the same sentence.
|
| I've always wondered if jail was appropriate for purely
| financial crimes. Maybe simply pauperizing people is the
| right answer and keep them pauperized from some time.
|
| Just imagine a prison system that doesn't contain financial
| criminals or drug cases. Transfer a certain amount of
| punishment to Singapore-style caning (probably a better mind-
| modifier than 6 months in the county clink) and you could
| shrink the whole industry to a tiny fraction of it's current
| size.
| backtoyoujim wrote:
| I disagree.
|
| --
|
| "Bernie really was a successful businessman with quite original
| insights into the market, and he's continued applying his
| business instincts in prison," Fishman said. "At one point, he
| cornered the hot chocolate market. He bought up every package
| of Swiss Miss from the commissary and sold it for a profit in
| the prison yard. He monopolized hot chocolate! He made it so
| that, if you wanted any, you had to go through Bernie."
|
| https://www.marketwatch.com/story/new-series-casts-bernie-ma...
|
| --
|
| Bernie wasn't trapped with them. They were trapped with Bernie.
| sushisource wrote:
| Assuming that's actually true, what an amazing picture it
| paints of him just being a complete fucking dick. It's not
| like the money he was making from that mattered at all... he
| did it just for shits and giggles. What an unbelievable
| asshole.
| Ekaros wrote:
| Also goes to prove that system was broken. It should not be
| possible for single individual to corner any market in
| prison. Either spendable money or amount of items sold per
| prisoner should be limited...
| lostcolony wrote:
| Not at all. Now he has more buying power in the yard than
| anyone else.
|
| He successfully managed to leverage market forces to create
| economic inequality and make himself 'rich' in the micro
| context he operated in.
|
| Which is a great example for why great wealth is not a
| virtue, a 'free market' is not a savior, and why greater
| regulation and taxation on the super wealthy is acceptable
| - they got there by being, as you say, unbelievable
| assholes.
| devmunchies wrote:
| so you're suggesting that there should be different punishments
| based on how much money someone has?
| jahewson wrote:
| Doesn't seem to be like Madoff feared jail. He did everything
| in his power to end up there.
| Wowfunhappy wrote:
| > Fines are just the cost of doing business.
|
| Isn't that just because the fines aren't high enough?
|
| I think we should make more fines based on an individual's (or
| company's) net worth.
| paulpauper wrote:
| >There are many other scandals: the whole subprime disaster,
| pollution from plants and the like where no one went to prison
| and people really should've.
|
| not true. people did go to jail for their role in the 2008
| banking crisis
| SkyMarshal wrote:
| One other thing worth observing: Bernie Madoff had nothing
| whatsoever to do with causing the Global Financial Crisis. Yes
| he committed a financial crime and defrauded a few investors
| with a ponzi, but he wasn't behind the systemic financial mass
| destruction of the GFC.
|
| Yet the media implicitly made him into a scapegoat for the GFC
| with heavy coverage of his trial filling the airwaves just as
| the public was authorities hold the perpetrators responsible.
| The media never explicitly claimed Madoff was part of the cause
| of the GFC, but rather used constant coverage of him to deflect
| attention from the real perpetrators of the crisis, who got
| away clean.
|
| What the media doesn't report is often more telling about its
| integrity and agenda than what they do report.
| dcolkitt wrote:
| > the whole subprime disaster... no one went to prison and
| people really should've
|
| This is a pretty common sentiment, but nobody can really
| articulate specifically _who_ should go to prison and _what_
| crime they committed.
|
| Being stupid, arrogant, reckless and willfully ignorant with
| money is not illegal. Just because hundreds of billions was
| lost does not mean that there's any criminal act. Major
| companies, and even financial institutions, fail all the time
| without there being any sort of crime.
|
| It's easy to fall into the trap of looking for mustache-
| twirling villains when you see a broken system. More likely the
| real culprit are misaligned incentives and dysfunctional
| institutions. If you actually dig into the details of the
| subprime crisis, the latter story is the much more plausible
| one.
|
| If you disagree, you have to specify who you think were the
| criminal masterminds behind the crisis. And more important, you
| have to show that you can prove criminal action and intent
| beyond a reasonable doubt. (And don't forget any would-be
| defendants will have access to the best legal defense teams on
| the planet.) I've never heard anyone actually present this case
| instead of just giving vague platitudes about how "the bankers
| should go to jail".
|
| The only real candidate for viable criminal prosecution are the
| mortgagees themselves. Many fraudulently misrepresented their
| income, assets or employment on their applications. And it
| would probably be hard for them to claim that they weren't
| aware. (In contrast the mortgage brokers could always claim
| they didn't bother verifying income because they genuinely
| trusted the applicants. That's obviously BS, but criminal
| liability is held to a much higher standard.)
| Bukhmanizer wrote:
| As I posted a couple days ago, I have my doubts about whether
| Madoff actually was that worried about prison. Seems to me like
| he lived like a literal king until he was 70, then went to
| jail. Maybe 70 year old Madoff didn't want to go to jail, but
| 40 year old Madoff may have been more than happy to make that
| deal. Seems to me that someone who was trying to avoid jail
| time would have spend more effort trying to ameliorate the
| situation rather than cover anything up.
| nemacol wrote:
| Do you think that a system of public service / community
| service requirements instead of fines would be better for
| common offenses?
|
| Without any real research I have often thought that instead of
| fines for parking violations, noise complaints, (other
| misdemeanors) etc - having someone spend time instead of money
| would make those sorts of punishments more equitable.
|
| There are issues - child care if a parent has to spend time.
| This system would need to accommodate peoples schedules,
| shouldn't have to miss work for a parking ticket, etc. Much
| harder to administer than mailing fines.
| hindsightbias wrote:
| Have a friend who got a driving related offense in a Bay Area
| county. He asked to go to jail for two or three weeks as he
| had a good job and income and could make it work with his
| boss. It was denied and he had to do weekend community
| service for 8 months.
|
| As a traveling consultant, this was a real wrench into his
| job and for his employer. He'd have to travel back every
| Thursday because he could not afford a Friday flight
| cancellation and missing service. Now, this court and county
| insists they structure it this way so to have the least
| impact on people. But he would arrive and watch all his crime
| peers arrive by taxi, foot or bike (bus service to that area
| on Saturday morning was a no-op).
|
| The vast majority of his peers were not people who could
| afford $20 each-way taxi or uber trips and worked jobs on
| weekends. They lost their jobs because their licenses were
| suspended. He suspected many of them gave up trying to comply
| and parked 1/2 mile away, driving their cars with with
| suspended licenses.
|
| Community service is basically a racket and not necessarily a
| better work/life deal than prison.
| cletus wrote:
| The criminal justice system already does this extensively.
| Often people are sentenced to community service.
|
| So I guess your question is really should this be extended to
| more low-level offenses like minor traffic violations?
|
| It's an interesting question. In Switzerland, for example,
| speeding above a certain level ceases to be a fixed fine and
| is instead a percentage of your income. I'm a fan of that.
| Fixed fines tend to discriminate against the poor
| disproportionately.
|
| I can imagine there are many people who would be better off
| and would prefer 2-4 hours of community service over a $100
| fine. So that should certainly be an option instead of paying
| the fine.
|
| Yeah I think the idea probably does have merit.
| yostrovs wrote:
| You're referring to reported income, that in Switzerland is
| a national tradition to hide.
| baud147258 wrote:
| losing your driving license seems also a good deterrent to
| avoid speeding
| jasonwatkinspdx wrote:
| One of my past bosses had a supercar as his daily driver.
| He had a specific law firm on retainer purely to handle
| speeding tickets. He'd call them when pulled over, and
| apparently they knew what to say to discourage cops from
| writing the ticket. People with the kind of wealth to
| routinely retain services like that effectively play by
| different rules than the rest of us in the US.
| BTCOG wrote:
| I'd much rather pay a $100 fine for whatever it is, than
| waste 2-4 hours of my time.
| comprev wrote:
| Same in Finland I believe. The fine is a % of your annual
| income.
| Ekaros wrote:
| Calculate daily income, minus some protected cut and then
| multiplied by number of days. For drunk driving for
| example 50 "day fines". So at net monthly wage of 1800EUR
| would be 1288. At 10kEUR monthly netwage 8128EUR...
|
| Also Finland does have option to turn some of these day
| fines to prison time at rate of 4 to 1..
| nemacol wrote:
| I like the % of income idea.
| throwaway0a5e wrote:
| I like it simply because screwing the rich and middle as
| hard as the poors on trivial issues is gonna make it real
| clear real quick how excessive penalties for common civil
| offenses are and pretty soon thereafter the laws will
| change.
|
| HN has this fantasy of $10k speeding tickets. In reality
| it's gonna look like 100mph speed limits, $100 fines for
| you and $10 fines for your nanny.
| bsanr2 wrote:
| This is true of much of the justice system. Penalties
| aren't meant to curb certain specific behaviors, they're
| meant to be used as general control mechanisms for people
| who can't wiggle out of punshiment by one means or
| another. I think the advance of physical and digital
| surveillance is eventually going to force a reevaluation
| of what behavior we criminalize, because either
| otherwise-upstanding people start to get caught in the
| web (see: piracy for personal use in the 00s), or we see
| an increasing number of highly public instances of
| clearly malicious or neglectful actors sliding (which
| we're arguably already seeing wrt police brutality
| cases).
|
| We're inadvertently about to make the dystunction of our
| legal system everyone's problem, which is when you'll see
| change.
| tralarpa wrote:
| > $100 fines
|
| Where I live, that's what you pay when you drive 10mph
| too fast.
| telesilla wrote:
| Don't excessive speeding tickets lead to a loss of
| license? This is the perfect response. Perhaps a more
| sophisticated society will one day know our fears and
| punish us accordingly (cue film script).
| Spooky23 wrote:
| For a normal person, yes.
|
| If you have money to light on fire you can hire attorneys
| to delay, appeal, etc. Eventually, it will catch up.
| throwaway0a5e wrote:
| >Don't excessive speeding tickets lead to a loss of
| license?
|
| Usually.
|
| >Perhaps a more sophisticated society will one day know
| our fears and punish us accordingly (cue film script).
|
| That was a plot line in 1984 and IMO flies in the face of
| equality under law.
| elil17 wrote:
| Other countries have $10k speeding tickets for the rich
| who ignore traffic rules. It's not such a fantasy, it's a
| real world way to reduce emissions and automobile deaths.
| monocasa wrote:
| Even $100k tickets.
|
| https://www.theatlantic.com/business/archive/2015/03/finl
| and...
| gambiting wrote:
| The problem is that above a certain level even that
| doesn't work. Like, answer me this - if you catch Jeff
| Bezos speeding, what possible fine can we impose on him
| to "hurt"? Compared to his wealth, we'd probably need to
| fine him like $1B for it to have _any_ effect, right? And
| someone would still argue that it doesn 't hurt him like
| a $500 ticket hurts a poor person.
|
| But then literally no court anywhere in the world would
| agree that a $1BN fine for speeding is "punishment
| fitting the crime". It's just not.
|
| Like, I like idea in general, but there will ways be
| people immune to it. Like others have said - the only
| real punishment is time. And not even necessarily prison
| - just make a CEO do 300 hours of community service, see
| how that works out.
| geoduck14 wrote:
| >gonna make it real clear real quick how excessive
| penalties for common civil offenses are and pretty soon
| thereafter the laws will change.
|
| I like you. This is good.
| galfarragem wrote:
| Nit pick: so income zero means no fines?
| klyrs wrote:
| Yet another argument for UBI, I guess?
| mc32 wrote:
| What do you do with crimes committed by people who have
| little in earnings (students, unemployed, etc.) or folks
| who earn "$1" in income but obviously are otherwise
| wealthy?
| whatshisface wrote:
| It would be based on the income of all of the money
| attached to you, including
| interest/dividends/appreciation within trusts with you as
| the grantee. Since wealth makes more money in virtually
| every way it can be stored, and since not investing it
| results in the "inflation tax," inflation + income tax =
| wealth tax.
| distances wrote:
| In Finland where all larger fines are day-fines the
| minimum day-fine is 6EUR.
|
| Calculation is based in your total income (including
| capital income). Most rich people would be affected due
| to capital income.
| nemacol wrote:
| Interesting question.
|
| I imagine someone has already thought of this from a tax
| point of view.
|
| Maybe some % of their net worth divided by their age
| (working age?) - say if they have 100 million dollars and
| are 60. 60-18 = 42. We would fine X% of 2,380,952.38? The
| idea being an attempt to come up with what their yearly
| salary could have been based on current value.
|
| I am sure there are some excellent flaws with that
| approach as well.
|
| Fun to ponder.
| dec0dedab0de wrote:
| I hope the government doesn't keep track of everyones net
| worth, it's bad enough they know everyone's income.
| amelius wrote:
| I want to see FAANG CEOs do public service, instead of being
| fined pennies.
| MisterBastahrd wrote:
| Common? Sure.
|
| Well educated, comfortable people who rob others of their
| livelihood? They deserve state penns, just like the poor
| folks who got three strikes for walking off with hedge
| clippers.
| dec0dedab0de wrote:
| I do, it would also be more fair than fines because it
| wouldn't be worse on the poor. I also think we should have
| corporal punishment, not because I believe in it per se, but
| because I think it is more humane than prison and would
| satisfy societies need for punishing the guilty.
| nemacol wrote:
| I can see an argument that poor folks have less free time -
| if someone worked a couple part time jobs, has kids or
| other family that rely on them, several hours picking up
| litter is a pretty big deal. Vs my 9-5 M-F job, no
| dependants, etc. several hours picking up litter is a
| bummer or inconvenience.
|
| I think that corporal punishment proposal is batshit
| insane.
| ryandrake wrote:
| Corporations (which are usually the payer of fines for bad
| behavior) don't fear prison because they can't be physically
| imprisoned. You can't put Exxon in jail. And, lawmakers
| deliberately make it so damn hard to pierce the corporate
| liability veil and hold shareholders or directors personally
| liable for the corporation's actions.
|
| So, we need to both move more towards prison _and_ start
| digging in to which actual people inside bad corporations were
| responsible for deciding to do wrongdoing.
|
| "BigCo settled and paid an insignificant $20M out of their
| river of money" is not very satisfying to read. "Joe Bigshot,
| former SVP at BigCo, was sentenced to 5 years in jail, and had
| to sell two of his nine houses to pay the $20M fine" is much
| better.
| etripe wrote:
| > You can't put Exxon in jail.
|
| If a corporation is a legal person with inalienable rights
| (as the SCOTUS seems to have decided on), but is intangible
| and immortal at the same time, what can you do? Any of the
| below:
|
| * freezing assets (=~ reclamation)
|
| * seizing accounts (=~ civil forfeiture)
|
| * suspend a business license (=~ locking them up)
|
| * introduce a revenue cap (=~ prison labour)
|
| * remove lobbyists (=~ losing voting rights)
|
| * dissolve or nationalise the company (=~ death penalty)
|
| This is by no means an exhaustive list.
| daniel-cussen wrote:
| Order the company to operate out of a prison complex, under
| guard surveillance, with monitored phone calls, the works.
| Every employee must go there for his entire shift, no
| telecommuting.
| dimitrios1 wrote:
| They'll carve out exceptions for the ones responsible at
| the top. You'll just be penalizing the common wage earner
| who have to feed their families.
| V-2 wrote:
| Even if they _didn 't_ make any exceptions, still, why
| should regular level employees get punished for something
| over which they've never held any responsibility
| whatsoever?
| bumby wrote:
| I think this may create asymmetries between risk/reward for
| those (real) people making the decisions.
|
| Think about it with a sports analogy. If I cheat and take
| performance enhancing drugs, there's huge potential upside:
| I can drastically increase my salary. If the consequence
| was spread to the team rather than concentrated on the
| individual it encourages the individual to take that risk.
| Maybe the team would be forced out of the playoffs. So the
| team lost their (smallish) chance at a trophy but I get a
| (largish) chance to increase my salary. In rare cases maybe
| the individual becomes a pariah. Regardless, if the
| individual isn't held disproportionately accountable it
| incentivizes bad behavior. I think there's a reason leagues
| ban individuals for certain behavior.
| etripe wrote:
| > I think this may create asymmetries between risk/reward
| for those (real) people making the decisions.
|
| Those asymmetries wouldn't be new, because the
| corporation as a construct already shields the real
| people making the decisions, along with the jurisprudence
| of slaps on the wrist. Are companies held accountable for
| their "externalities" today, like mass foreclosures in
| real estate, exploitative labour conditions, poisoning
| the water supply, oil spills, climate change or
| destruction of habitats?
|
| In keeping with the prison metaphor, would you work for
| an "ex-con" company? How about one on "probation" when
| you've got a family to support? Would you invest in one?
| As I see it, the potential for self-corrective behaviour
| is greater with my (admittedly, off-the-cuff) suggestions
| than the status quo.
| bumby wrote:
| I think we're in agreement. The asymmetric risk I was
| speaking of is the status quo where individuals are not
| held accountable but rather the corporate "team" is via
| fines etc. It makes risky decisions more palatable to an
| executive officer because they have less downside skin in
| the game.
| smolder wrote:
| If workers had to worry about the ethics of their
| employer getting the whole company in trouble, that would
| be a good thing in the sense of drying up the labor pool
| for dubiously run companies. On the other hand, the
| Justice Dept doesn't always land on the side of justice,
| so smaller companies could end up victims of abuse of the
| court system in the name of competitive advantage.
| etripe wrote:
| > smaller companies could end up victims of abuse of the
| court system in the name of competitive advantage.
|
| The same already goes for things like IP and trademark,
| so that's a fair bet. Good point.
| qwertox wrote:
| Doesn't it have a different effect, though?
|
| Let's assume you have a company like Volkswagen and the
| corporate executives have decided they play the game of not
| getting informed about some really shady business practices
| which are helping the company to earn good money.
|
| Would it make sense for Germany to punish Volkswagen by any
| of the means you mention, thus weakening the company in
| relation to foreign car makers, vs. to hold all (or the
| relevant) executives responsible, seize all their assets,
| prevent them from working in any administrative position
| ever again, limiting their income to a certain amount. Like
| really sanction them.
|
| The company would continue to run, shareholders would be
| affected minimally, the problem would have been corrected.
| Of course this is a blue-eyed look at it, but seriously,
| you also can't do the comparison you are making. They just
| don't have the same effect.
| etripe wrote:
| > to hold all (or the relevant) executives responsible,
| seize all their assets, prevent them from working in any
| administrative position ever again, limiting their income
| to a certain amount. Like really sanction them.
|
| All for it, if it actually happened anywhere in recent
| history. I'm not being facetious, but I'm not aware of
| any examples or am failing to recall them. Do you have
| any in mind?
|
| > the problem would have been corrected.
|
| I'm not so sure. Suppose the company made massive profits
| (or avoided capital expenditure, or limited losses) by
| cheating at something like emissions. Then, the C-level
| execs get fired, their assets get seized and they're
| barred from holding administrative functions again. Did
| the company not still gain massive profits? Do you think
| it wouldn't be able to find another set of fall guys, if
| it pays them enough? Wouldn't the company do it again, if
| the risk is offset to a bunch of figureheads? Your
| suggestion would only rule out bad behaviour by those
| same actors in the future. In a more charitable reading:
| it _would_ lead to better outcomes than today 's rules.
|
| Meanwhile, the damage through emissions and particular
| matter has been done. According to the WHO (0), about 25
| people died of particulate and ambient pollution per 100k
| people in Germany in 2016. That puts it at 2000 people
| country wide that year. Did Volkswagen kill anyone by
| doing this? If so, how many of those could have been
| avoided had they not cheated on their tests? What about
| the impact on climate change? How were these problems
| theoretically addressed by seizing C-level execs' assets
| without giving them jail time?
|
| > Would it make sense for Germany to punish Volkswagen by
| any of the means you mention, thus weakening the company
| in relation to foreign car makers
|
| Yes, because the infractions were socially destructive.
| After all, the German government's first responsibility
| is towards the greater good for its citizens. According
| to Volkswagen's website (1), 44% of their employees or
| 292,378 people work for them in Germany itself. Directly,
| of course. Applying a fairly generous, tenfold knock-on
| effect, less than 4% of the total population - 2% of the
| active population - works for or with them. According to
| CNN (2), it represented 2.7% of Germany's GDP.
|
| Also, it would _hurt_ and stimulate competition. Not
| being able to pay out dividends for a year due to revenue
| caps, not being able to sell products in Germany that
| year due to cheating at exchaust measurements, etc might
| change shareholder voting and investment behaviour. It
| would damage the brand 's image, reduce its ability to
| attract employees, etc. Maybe market forces would then
| finally be able to correct bad behaviours. Today's "cost
| of doing business" slaps on the wrist simply don't seem
| to have any corrective effect whatsoever.
|
| > you also can't do the comparison you are making.
|
| I was being hyperbolic for effect. When staying within
| the confines of pragmatism, surely some kind of revision
| to corporate/criminal law (or its enforcement) is
| warranted. Most people don't get the death penalty,
| either, or go to jail. Hell, apparently some people don't
| even get speeding tickets! The same would probably go for
| corporate actors even if the consequences were steeper.
|
| [0]
| https://www.who.int/data/gho/data/indicators/indicator-
| detai...
|
| [1] https://annualreport2018.volkswagenag.com/group-
| management-r...
|
| [2]
| https://money.cnn.com/2015/09/22/news/economy/volkswagen-
| ger...
| foogazi wrote:
| > thus weakening the company in relation to foreign car
| makers
|
| Now you are getting into too big to fail territory where
| applying the letter of the law affects the
| workers/citizens
|
| Similar things would happen due to gross incompetence
| from workers causing and oil spill (Exxon-Valdez
| disaster)
| sudosysgen wrote:
| Punish the shareholders, but let the company continue
| working. In the minimal case this is a tax on profits, in
| the maximal case this is a nationalization with no
| compensation.
| seneca wrote:
| > If a corporation is a legal person with inalienable
| rights (as the SCOTUS seems to have decided on)
|
| Please stop repeating this nonsense. Corporate Personhood
| is a legal idea, and does not mean a "corporation is a
| legal person". Without corporate personhood, you wouldn't
| be able to sue a company for wrongdoing if the guilty
| employee quit, or even enforce basic contracts.
|
| There are serious problems with corporations not being held
| liable, but the situation would be worse without Corporate
| Personhood, not better.
| believeinskills wrote:
| Want to elaborate?
| ajcp wrote:
| I think the (now deeply ingrained) confusion stems from a
| misconception surrounding the _Citizens United vs. FEC_
| ruling, where the majority opinion in part cited campaign
| finance restrictions as a violation of First Amendment
| rights.
|
| Since the Bill of Rights are protections of _citizens_
| rights, it has widely been misreported that this meant
| the SCOTUS ruling de jure recognized corporations to be
| citizens themselves.
|
| This, of course, is not correct. The majority opinion in
| part says that "if the First Amendment has any force, it
| prohibits Congress from fining or jailing citizens, or
| associations of citizens, for simply engaging in
| political speech." The key phrase here being
| "associations of citizens", which the majority
| interpreted broadly to include corporations. This does
| not at all bestow personhood or citizenship upon
| corporations, legal or otherwise. It does afford
| corporations some protections as they are now legally
| recognized as "associations of citizens".
| dougmany wrote:
| At the end of the day the corporation is still enjoying
| those rights. The majority chose to ignore the veil and
| freely pass along citizens rights the to association.
| ajcp wrote:
| I agree, it was too broad an interpretation, since
| corporations already have a legal representation and are
| an economic entity, not a civil society association
| through which citizens relate to or exercise their
| political will.
| etripe wrote:
| I'm open to having misinterpreted the situation. How is
| corporate personhood not the same as a corporation being
| a legal person? I mean functionally, not semantically. If
| you would, help me understand why this is not a
| difference without distinction.
|
| Please note I didn't pass any judgement on whether a
| corporate person is a useful construct or whether it
| should be abolished. I agree it serves a purpose and
| should continue to exist.
|
| What I would argue is "limited liability" as it applies
| to and shields company owners shouldn't mean "free from
| consequences" for the corporation as an aggregate. If I'm
| reading your post correctly, we don't disagree there.
| simplerman wrote:
| You would sue guilty employees even if they quit and move
| to another company. I feel that would be much better for
| personal responsibility.
|
| And the best part about this would be people cannot hide
| behind "I am just following orders."
| mminer237 wrote:
| Also, it would mean you usually would not recover
| anything since a corporation usually has deep pockets and
| your average employee is not even worth suing even if you
| could win.
| simplerman wrote:
| True, but that may be a good thing. This may prevent
| people from suing for small infractions.
|
| On other hand, let's say, if your average software
| developer knows that they can be sued into bankruptcy,
| then they will not release unfinished code and voice
| strong opposition to it. Thus shifting responsibility to
| middle managers. Now if middle managers know that they
| can be sued into bankruptcy, they will not override
| developers concerns and extend deadline and refuse to
| push unfinished product. Executives may try to override
| managers decisions but then responsibility shifts to them
| and they would not want to lose significant portion of
| their net worth. Board or managing-owners may try to
| override CEO, but then they will be responsible and they
| would not want to be personally sued and lose a portion
| of their personal wealth.
|
| Yes this may not impact billionaire owners but that is a
| small number. Most companies will be more ethical and
| people will have a high degree of personal
| responsibility.
| bumby wrote:
| I think my issue with your hypothetical is that is
| assumed a company is already viable and in business. One
| of the primary advantages of a corporation or LLC is it's
| limited liability. I.e., you can take a risk and if
| things don't work out you can still personally recover. I
| suspect if we took the approach of your post, many, many
| fewer people would try their hand at starting a business
| because there are no limits to liability and much less
| capital to fund businesses if shareholders downside
| wasn't capped.
| monocasa wrote:
| You can sue the government even though they aren't
| granted personhood.
| jameshart wrote:
| 'Granted personhood' doesn't mean anything. The relevant
| legal term is 'legal personality'. Governments certainly
| have legal personality. If they didn't they wouldn't be
| able to enter into contracts, file lawsuits, or... really
| make any claim to exist in any meaningful way.
| monocasa wrote:
| Is the government itself granted first amendment
| protections as an association of citizens?
|
| Or is it thought of a fundamentally different sort of
| entity, that yes can enter some sorts of legal
| arrangements, but isn't granted all the rights of a
| citizen?
| [deleted]
| simonh wrote:
| The details of that probably haven't been settled by
| supreme court rulings, but the basic principle is that
| when a corporate entity says something, what's actually
| happening is that a person in the company is saying this
| thing, on the behalf of other people in that company, on
| behalf of, etc until you get to the shareholders. It's
| people all the way down, and people have rights. The same
| could be said of the government.
|
| Note I'm a British Citizen, but the same basic legal
| principles apply over here, and have done for hundreds of
| years. I know there's a widely held conspiracy theory
| that this is all new, but jurists and legal scholars have
| been discussing and applying these principles for a very
| long time.
| ac29 wrote:
| Its harder to sue the government than you might think,
| see for example: https://en.wikipedia.org/wiki/Sovereign_
| immunity_in_the_Unit...
| monocasa wrote:
| Regardless, the argument there isn't that you can't sue
| the government at all, but instead that the government is
| granted immunity for some subset of actions.
|
| Going back to the original point, personhood is clearly
| not a requirement for being named in a suit. For more
| examples you can also see in rem cases, where the
| government sues property itself for civil forfeiture. 11
| 1/4 Dozen Packages of Articles Labeled in Part Mrs.
| Moffat's Shoo-Fly Powders for Drunkenness did not need
| personhood to be named in a lawsuit. https://en.wikipedia
| .org/wiki/United_States_v._11_1/4_Dozen_...
| r00fus wrote:
| Civil forfeiture where govt sues "property" to seize it
| so they don't have to have a trial for the person owning
| said property is a shady dark pattern that shouldn't be
| cited as an ethical approach at all. Just my opinion.
| monocasa wrote:
| It's not being cited as an ethical approach, only that
| the court system clearly doesn't require something to
| have full personhood in order to be sued.
| iudqnolq wrote:
| > but instead that the government is granted immunity for
| some subset of actions.
|
| It's actually the opposite. You can only sue the
| government when they explicitly give you permission.
|
| https://en.wikipedia.org/wiki/Sovereign_immunity_in_the_U
| nit...
| monocasa wrote:
| The whole point I'm making here is that you can sue an
| entity without personhood.
| iudqnolq wrote:
| That's right. I just pointed out the one of the pieces of
| evidence you used is slightly wrong. Suing the government
| is a very special case.
| monocasa wrote:
| See the "Exceptions and abrogation" section of your own
| citation. It is indeed a (albeit large) subset of actions
| to which they can apply sovereign immunity.
| iudqnolq wrote:
| Yes. All I'm trying to say is it's opt-in, not opt out. I
| don't find this particularly interesting or important so
| this is the last comment I'll make here.
| monocasa wrote:
| Except it's not opt-in for a certain subset of actions of
| the government. For instance they can't block a
| discrimination suit on sovereign immunity grounds.
| tacostakohashi wrote:
| You may enjoy reading this press release, then.
|
| https://www.justice.gov/archive/opa/pr/2008/September/08-at-.
| ..
|
| Unfortunately, there aren't too many of those.
|
| https://en.wikipedia.org/wiki/List_of_companies_convicted_of.
| ..
| newsclues wrote:
| Normalization imprisonment of boards of directors and
| executive officers of companies that break the law.
| hamandcheese wrote:
| I tend to agree, but how do you deal with sketchy companies
| installing a sham board and executives?
| Ekaros wrote:
| Maybe if certain percentage of ownership can be proven,
| by any route. Let's say 1%. So you own 1% of company and
| it does some criminal. You will suffer 1% of penalty.
| lostcolony wrote:
| Why try to stop it? Pretty sure a sufficiently enabled
| and incentivized prosecutor will be able to find the
| actual culprits. "Discovery" exists as a legal process
| after all.
|
| Sham boards/executives only are issues if the prosecution
| itself is a sham, more concerned with the appearance of
| the thing than deterrence.
| hamandcheese wrote:
| My interpretation of the GP was that if companies are
| guilty of wrongdoing, boards and executives should be
| imprisoned without any additional burden of proof
| required to establish individual culpability. This sounds
| somewhat appealing, as how can these people _not_ be
| responsible in some way?
|
| Otherwise, no need to single out the board.
| newsclues wrote:
| Yes, target the leaders responsible for criminal
| activities.
|
| But perhaps the shareholders should bear responsibility
| as well.
| DrBazza wrote:
| > So, we need to both move more towards prison and start
| digging in to which actual people inside bad corporations
| were responsible for deciding to do wrongdoing.
|
| And that's like turkeys voting for Christmas. In most Western
| countries, governments, political parties and businesses are
| so intertwined, your member of congress/senate/parliament is
| probably a businessman (Trump!), or is lobbied by businesses,
| or the party is funded by business.
|
| That's not to say it won't happen, but it takes something
| fairly seismic to make governments act.
| P_I_Staker wrote:
| Yeah, personal responsibility is great and all; a vital piece
| of the puzzle. Someone will always be willing to be the fall
| guy for money, though. It doesn't seem to make logical sense,
| because what's the point of having millions and being locked
| up? but people aren't logical.
|
| I do fear shifting too much responsibility to individuals
| will just absolve the people really pushing for this stuff,
| in favor of just finding employees to blame, and constantly
| making individuals fear for their jobs (and being
| blacklisted), or prison... but the ones responsible will have
| nothing to fear.
| ginko wrote:
| I guess the corporate equivalent would be the forced shutdown
| of all company infrastructure for N months.
| unethical_ban wrote:
| Banking? Raw materials? Shipping?
|
| How do people think that all corporations/companies are
| discretionary?
| i_haz_rabies wrote:
| that just burns all the regular people working regular jobs
| at that org.
| hobs wrote:
| So fix the social safety net, too big to fail is not
| something we want to have, especially when it comes to
| actively harmful companies...
| i_haz_rabies wrote:
| Jailing the people responsible seems like a way better
| option than putting potentially tens of thousands of
| people on welfare.
| ericd wrote:
| Part of the punishment could be that the company still
| has to pay all salaries and hourly wages while it's shut
| down.
| throwawayboise wrote:
| With what earnings would they do this?
| ericd wrote:
| Their cash balance, debt, or equity raise. Or they go
| bankrupt. That would be part of the risk of doing
| something that got your company this punishment.
|
| To be clear, I'm not advocating these shutdowns as a good
| idea, there are a lot of implications that I haven't
| thought through.
| bboylen wrote:
| Who is going to invest cash into a business that has to
| stop operating for N months, while maintaining everyone
| on payroll?
| gambiting wrote:
| Why would anyone invest anything in this scenario? Most
| companies in the world operate without any investment
| whatsoever.
| bboylen wrote:
| As we saw with the covid market crash, a lot of companies
| (like airlines) don't keep a lot of cash on hand. If they
| had 0 revenue for several months but still had operating
| costs, I am assuming they would need a loan
| ericd wrote:
| Perhaps one of the many professionals working in
| distressed debt or special situations? If you're not
| familiar, there are desks at Goldman, etc called "Special
| Situations" that focus on relatively niche investment
| opportunities. Investors just need the price to be right.
| Would likely be bad for the shareholders, but again,
| that's part of the punishment.
| bboylen wrote:
| There could be a price that worked but I don't think
| there are many businesses that can go offline for several
| months and come back fine. I'm most familiar with the
| industry I work in, (O&G), where a day not operating is
| an incredible loss. Is shutting down the oil refineries
| and petrochemical complexes what is best for the country?
| I just struggle to see how this wouldn't just punish
| normal workers and furthermore just make the economy
| worse off as a whole
| ericd wrote:
| There would be economic damage, no doubt. And maybe to
| the level where it's politically impossible to enact this
| kind of thing. And maybe it's a stupid idea :-)
| hobs wrote:
| Managing the long term cost of reforming entire
| organizations is probably not worth it, better to destroy
| it AND jail the leaders.
| a3camero wrote:
| Who not both? Just because it's normal that low level
| workers are fired and get nothing doesn't mean that's how
| it has to be. Severance could be generous enough to make
| this work out.
| gumby wrote:
| When a car runs over a pedestrian the car is not jailed, the
| driver is.
|
| When a corporation runs over a town, why is the person or
| people "steering" the corporation not jailed?
| john_moscow wrote:
| >Joe Bigshot, former SVP at BigCo, was sentenced to 5 years
| in jail, and had to sell two of his nine houses to pay the
| $20M fine" is much better.
|
| Well, they sort of do that in Russia. So the CEO/founder of
| almost any sketchy company is a homeless person that signed
| the paperwork in exchange for some free vodka. Didn't
| particularly solve the problem.
|
| Corporate fines just need to be sufficient to make such
| "business" unprofitable. "BigCo fined for 5% of its market
| cap" would be quite a deterrent. Except, it won't be
| happening as long as the regulators are in bed with the big
| business they are supposed to regulate.
| mannykannot wrote:
| The second paragraph of the post you are replying to seems
| to anticipate this response:
|
| "So, we need to both move more towards prison _and_ start
| digging in to which actual people inside bad corporations
| were responsible for deciding to do wrongdoing. "
|
| In the post-Enron world, however, executives have learned
| how to use incentives to motivate their minions to break
| the law without being explicitly told to do so. On the one
| hand, this makes it difficult to prosecute those who bear
| most responsiblity; on the other hand, more effective
| prosecution might curtail the supply of minions who can be
| motivated to be compliantly criminal.
| hackflip wrote:
| "Will no one rid me of this turbulent priest?"
| rjsw wrote:
| Also "Working Towards the Fuhrer" [1].
|
| [1] https://en.wikipedia.org/wiki/Ian_Kershaw#%22Working_
| Towards...
| r00fus wrote:
| So - stochastic dictatorial regime? (stolen from:
| stochastic terrorism).
| tfehring wrote:
| I'd also like to see more fines in the range of multiple
| years' worth of revenue, but it wouldn't change directors'
| incentives since they still have limited downside exposure
| and therefore asymmetric payoffs. Even if a CEO runs a
| company into the ground they'll probably still be rich
| since they only have levered exposure on the upside
| (through ISOs, etc.) and comparatively limited exposure on
| the downside.
| fairity wrote:
| > Corporate fines just need to be sufficient to make such
| "business" unprofitable.
|
| This seems untenable because large businesses will then be
| forced to break individual business units into separate
| corporations to manage risk. At first glance this might
| seem fine, but you'd basically be creating huge drag on the
| economy bc large businesses benefit from economies of
| scale.
| 55555 wrote:
| > Well, they sort of do that in Russia. So the CEO/founder
| of almost any sketchy company is a homeless person that
| signed the paperwork in exchange for some free vodka.
| Didn't particularly solve the problem.
|
| Can you find me a reference to this? I could believe it,
| but by default I'd be surprised if it were true at any real
| scale.
| postsantum wrote:
| We refer to such person as "zits-predsedatel'" which
| means chairperson-to-be-jailed
| baq wrote:
| oh, regulators are playing the market both ways.
| congressmen and senators don't have any issue with trading
| options.
| bedhead wrote:
| This is one reason why CEO pay has skyrocketed: hazard pay.
| Something goes wrong, even if the CEO had no idea about it,
| and who gets vilified and maybe even prosecuted? The CEO.
| Just saying...there are trade offs for everything.
| vagrantJin wrote:
| Hazard pay? Why this sounding like CEOs do deep sea diving,
| welding huge oil pipes while squid and sharks look at you
| in a tiny cage with a few thousand amps of arc.
|
| Let's call it what it is, _It 's a golden parachute._
|
| I'd postulate that taking responsibility and leading the
| effort to genuinely right the wrongs would earn the company
| way more godwill from the people and media than activating
| your _trump card_ which in this case is a mountain of cash
| to land on after successfully escaping responsibility.
| albatross wrote:
| Is that really a reason for skyrocketing pay though?
| Struggling to come up with any instances where this
| actually happened and such "hazard pay" was "justified."
| smolder wrote:
| It's an excuse but not a good reason. The reason is more
| that people on top of the income/wealth divide have the
| power to give themselves more power and keep growing the
| divide, and they're unafraid of the risks that come with
| the reward. Populist uprisings are a thing of the past in
| the info age. The little people are sufficiently
| surveiled and controlled by the network, by partisan
| propaganda that keeps them infighting, etc.
| throwawayboise wrote:
| There's no need to put Exxon in jail. Exxon is what the
| C-level executives make it. If they decide that Exxon is
| going to break the law (or permit it to happen), and are held
| personally responsible, that is all you would need to do to
| see a large change in behavior.
|
| Shareholders are too far removed from personal
| responsibility, and holding them responsible beyond the
| financial risk they already carry would basically destroy the
| rationale for the existence of limited liability
| corporations.
| kiba wrote:
| What is this obsession with jailing people?
|
| Prison is pretty inhumane, especially in the context of a
| limited lifespan. Even if we're immortal, it's still inhumane.
|
| Moreover, how does making people go to prison fixes anything?
| It's just a way to assign punishment and blame people.
| zymhan wrote:
| You can't just fine billionaires and expect that they'll
| reform.
| Ekaros wrote:
| Or maybe we could. Just make them go enough to negative
| without option of bankruptcy... Paying at couple billion
| back after selling all the holdings and property don't
| sound too unreasonable. We could even leave them some money
| to live like sum equal to minimum wage.
| mpalmer wrote:
| Time is the only asset we all mostly have in common. _If_
| your laws and the enforcement thereof are just (big if), then
| why shouldn 't the punishment be exacted in a way that
| generally affects everyone equally?
|
| Beyond that, prison is inhumane as a rough function of where
| you are. Maybe you're thinking of a particular prison system.
|
| How does it fix anything? It should primarily be a deterrent,
| and secondarily a way to protect society from dangerous
| people.
| cogman10 wrote:
| I have a sneaking suspicion that if more billionares spent
| time in prison, we'd see massive reform on the prison
| system towards the humane.
| pydry wrote:
| Or a class system for prisons.
| cogman10 wrote:
| Probably depends on how many prisons are private vs
| public.
|
| I could definitely see a class system forming in private
| prisons (it is sort of there already). For public
| prisons, that's harder. They have to convince law makers
| to pass laws to enable them to get special treatment.
| That'd be pretty unpopular.
|
| But, then again, MJ legalization is very popular and it
| still hasn't happened yet so who knows if policy
| popularity even sways politicians at this point.
| cmurf wrote:
| Rich people already go to low security VIP prisons.
| Visits with family in parks, better food, internet, and
| everyone is non-violent. Billionaires aren't put in
| general population.
| cogman10 wrote:
| What the US most commonly jail's people for (drug offenses)
| is barbaric.
|
| That said, the reason for jail is to not only rehabilitate
| but also to deter.
|
| The problem we have is that white collar crimes almost never
| result in jail time for the rich. The financial deterrent is
| just ineffective at stopping bad behavior. They can run the
| risk/rewards calculations and often come up with the
| conclusion that "we'll make more money than we lose to a
| fine" and they proceed to do the bad behavior.
|
| A good example of this is fireworks at disneyland. They pay
| fines for their daily displays and write it off as a cost of
| doing business. So what's the point of the fine? Weren't we
| trying to stop them from launching fireworks or was it just
| to extract money from a theme park?
|
| Now imagine if the action for launching fireworks was the
| general manager of disneyland or their manager serving 2 days
| in jail. I can assure you, those fireworks would be stopped
| the next day.
|
| That's the point. If the law is only a set of rules for the
| poor how can anyone be confident that it is going to work or
| be applied fairly? If you can buy your way out of compliance
| then what's the point?
| bluedino wrote:
| >> What the US most commonly jail's people for (drug
| offenses) is barbaric.
|
| If you're talking about prisons, nearly 4 times as many
| people are in prison for violent crimes (robbery, assault,
| rape, murder...) than drug charges.
|
| https://www.prisonpolicy.org/reports/pie2020.html
| sooheon wrote:
| Great link, thanks.
| minitoar wrote:
| I actually feel like Disney would be willing to pay people
| to spend 2 days in jail in order to keep their fireworks
| show. You've just moved the cost from a fine to a salary.
| cogman10 wrote:
| You just have to go up the management chain until you
| find the person that will stop the practice.
|
| I doubt if it ended up with the CEO and going to jail
| that they'd keep it up.
| leetcrew wrote:
| yeah and if that doesn't work, you can always go after
| their family.
| vidarh wrote:
| In Norway, a "life" sentence used to be 21 years, with parole
| possible after 14. Now there is a stricter option that in
| theory can end up being actual life, but it requires
| extension by 5 years at a time after evaluation to determine
| if the prisoner is still an active threat to society, and
| it's rarely used.
|
| US sentencing has always seemed absolutely crazy to me, to
| the point where if I through some magic found myself on a US
| jury I'd have a hard time justifying a vote to convict, and
| the sentences seem to be more about vengeance than about
| rehabilitation or making society safer.
| bobthechef wrote:
| I see, so Breivik can go kill a bunch of children and hang
| out in "prison" with his XBox and hope to leave on parole?
| And that's normal for you?
|
| I mean, if you think that isn't an insult to the victims,
| their families, etc.; if you don't think _that 's_
| absolutely crazy, and I don't know what to tell you, man.
| Heck, if killing someone, let alone that many people, isn't
| so bad, why do we care about any other crime as much as we
| do? Why all this ridiculous outrage in the public square
| about all sorts real and imagined sins when life itself is
| so cheap?
|
| Whatever the flaws in the American justice system (and
| there are many), Norwegian law and the sensibilities behind
| it are insane in this respect.
|
| > sentences seem to be more about vengeance than about
| rehabilitation or making society safer.
|
| Justice has more than one aim. Deterrence and
| rehabilitation are two of them, so is the preservation of
| social order. But justice is also _retributive_.
| Retribution isn 't about hate, whatever modern confusion
| tells you. That's why we aim to have qualified impartial
| third-parties (judges) who are supposed to adjudicate such
| things instead of leaving things up to a hate-filled lynch
| mob, one that often confuses envy with anger at injustice.
| kiba wrote:
| _Justice has more than one aim. Deterrence and
| rehabilitation are two of them, so is the preservation of
| social order. But justice is also retributive.
| Retribution isn 't about hate, whatever modern confusion
| tells you. That's why we aim to have qualified impartial
| third-parties (judges) who are supposed to adjudicate
| such things instead of leaving things up to a hate-filled
| lynch mob, one that often confuses envy with anger at
| injustice. _
|
| And Norwegian society operate just fine with Breivik
| playing xbox in prison.
|
| In the end, retribution still doesn't fix anything. We're
| machines. We should act like this is true, not surrender
| to our monkey brain.
| AshamedCaptain wrote:
| > if you don't think that's absolutely crazy, and I don't
| know what to tell you, man
|
| > to adjudicate such things instead of leaving things up
| to a hate-filled lynch mob
|
| See the duality of your own post.
|
| If I try to be impartial, I can hardly see the point to
| any sentence larger than a couple decades. When you get
| to those levels of sentencing where you basically
| decimate the total useful lifetime of someone, you might
| as well kill the person.
|
| ... and I guess I understand something now.
| anthonygd wrote:
| > > if you don't think that's absolutely crazy, and I
| don't know what to tell you, man > > to adjudicate such
| things instead of leaving things up to a hate-filled
| lynch mob
|
| > See the duality of your own post.
|
| That reads as though you scored some virtual point, but I
| can't figure out what you're saying. Can you clarify?
| vidarh wrote:
| > I see, so Breivik can go kill a bunch of children and
| hang out in "prison" with his XBox and hope to leave on
| parole? And that's normal for you?
|
| Breivik is unlikely to get out because he is likely to
| continue to be deemed a threat on every re-evaluation.
| But if he demonstrates that he is reforming and is no
| longer likely to be a threat, then yes, that is not just
| normal to me but desirable.
|
| It is a system that works given that re-offending rates
| in Norway are low.
|
| I'd consider it an absolute insult to victims of violent
| crime to focus on things like retribution over policies
| shown to actually reduce the rates of future crime.
|
| Valuing the perpetuation of violence for the sake of
| retribution over reducing the number of victims seems to
| me the height of barbaric and immoral behaviour.
|
| But even without any benefits to re-offending rates I'd
| still consider it barbaric to threat prisoners badly for
| retributive purposes. Free will is a fiction, and so when
| we are punishing people for anything other than the
| practical purposes of keeping society safe we are no
| better than those we assign blame for crimes, we just
| tell ourselves we are.
| skwirl wrote:
| If free will is a fiction, how can you pass judgement on
| "us" for punishing people? If free will is a fiction then
| what good is saying things like "if we do X we are no
| better than people who do Y" when nobody has any choice
| in what they do?
| vidarh wrote:
| Well, the obvious answer is that there is no choice in
| that either, but that in most context it serves us best
| to act as if we do have choice, because the effects of
| our actions still affect us.
|
| If we "step into the fiction" so to speak, there is
| reason for passing judgement if passing judgement leads
| to better outcomes. A lack of agency does not shield us
| from those outcomes.
|
| But it makes retribution as a justification fundamentally
| immoral. Of course, there's recursion here - retribution
| for retribution would be no better.
| greedo wrote:
| It's been a long long time (if it ever existed) where US
| prisons gave a crap about rehabilitation. It's always
| been about punishment first, then keeping society "safe"
| second. And studies have consistently shown that the
| death penalty acts as no deterrent to murder; I would
| suspect the same would show that other crimes are not
| deterred by the threat of prison. Too many crimes are a
| result of impulse control failures in individuals.
| ecocentrik wrote:
| oversimplify much?
| ericbarrett wrote:
| My prediction: Start giving perpetrators of financial crimes
| real prison time and you'll see major prison reform within a
| few years.
| refurb wrote:
| You think white collar criminals go to bad prisons?
| [deleted]
| SilasX wrote:
| Yes, most US prisons are inhumane. That doesn't apply to the
| minimum security resort prisons that white collar criminals
| get sent to.
| bobthechef wrote:
| > Prison is pretty inhumane, especially in the context of a
| limited lifespan. Even if we're immortal, it's still
| inhumane.
|
| You have a very warped view of justice. Rape isn't
| "inhumane"? Murdering someone isn't "inhumane"?
|
| In the case of premeditated murder the murderer forfeits the
| right to life, so the death penalty, especially for
| especially egregious acts, is entirely just. To claim it
| isn't is unjust and an insult to the victim. Mercy only has
| meaning when the penalty is deserved and prudence will
| dictate whether the peantly ought to be exercised in the
| given circumstances given the best account of the facts and
| our limited knowledge (hence the need for judges who have the
| authority and the perspective to better adjudicate
| dispassionately instead of fueling some Sicilian family feud
| or a lynch mob that confuses envy with anger at injustice).
|
| > Moreover, how does making people go to prison fixes
| anything? It's just a way to assign punishment and blame
| people.
|
| Uh, yes? OBVIOUSLY, if someone is GUILTY, he DESERVES blame
| and punishment. I don't know why this is so difficult for you
| to understand or how you could possibly think this is wrong
| or that a world without them is preferable or even feasible.
| If someone has freely committed a crime, if he has chosen to
| commit that crime and has carried it out, then OBVIOUSLY he
| bears responsibility for it and is culpable for his actions.
| bennysomething wrote:
| How do you know this? Who exactly do you mean by "the rich"
| mensetmanusman wrote:
| The most interesting thing to me was that he was punished more
| than some murderers...
| breck wrote:
| > clients entrusted him with more than $19 billion in principal
|
| > Irving Picard, the trustee appointed to unwind the accounts,
| had recovered more than $14.3 billion
|
| Wait WHAT?? That's only a 25% loss. Not the 100% loss I assumed.
| Does anyone know more?
| gruez wrote:
| That's not too surprising. Matt Levine wrote about the recent
| 1inMM ponzi scheme recently[1] and the scammer's "take" was
| only 10%. It makes sense if you think about it. For a ponzi
| scheme to work you need to constantly circulate cash (from new
| investors to old investors), so it's hard for you to take a lot
| without collapsing the whole scheme.
|
| [1]
| https://www.bloomberg.com/opinion/articles/2021-04-08/archeg...
| darig wrote:
| > Does anyone know more?
|
| Yes. It is very hard to spend $19 billion.
| zatertip wrote:
| _principal_ -- they probably thought their accounts were worth
| considerably more due to accumulated returns.
| mumblemumble wrote:
| Matt Levine recently observed, when talking about another
| Ponzi scheme, that it would be nice if newspapers would quote
| the net and not just the gross.
|
| Though that wouldn't tell the whole story, either. You would
| have the earnings of people who managed to get out of the
| scheme before it collapsed offsetting the losses of those who
| didn't. You're also not taking into account the opportunity
| cost of having that money in the Ponzi scheme instead of,
| say, VTSMX.
| [deleted]
| Gustomaximus wrote:
| does this account for time? They might get their $10m back but
| if they invested it anywhere else it would be $30m now and
| inflation has eaten a chunk.
|
| I do know some people that pulled their fund before the
| collapse had their gains taken back to the principal amount.
| geocrasher wrote:
| The debt that all men pay.
| dboreham wrote:
| He couldn't have done it without the software developers who
| wrote clever code to generate fake but plausible trades.
| drawkbox wrote:
| Still blown away that he was basically just putting the funds in
| a Chase bank account and not even investing it.
|
| > _In a 2013 email to CNBC from prison, Madoff claimed the break
| in the market that started the Great Recession led to his scam._
|
| > _"I thought this would be only a short-term trade which could
| be made up once the market became receptive," he wrote. "The rest
| is my tragic history of never being able to recover."_
|
| > _In fact, investigators said, Madoff did not execute a single
| trade for his advisory clients for years. Rather than employing a
| so-called split-strike conversion strategy as he claimed, he
| simply deposited investors' funds in a Chase bank account, paying
| off new customers with funds from earlier customers -- a classic
| pyramid scheme -- and providing his clients with falsified
| account statement. The investment "returns" shown on those
| statements -- some $50 billion in all -- were pure fiction._
|
| > _The scandal at Bernard L. Madoff Investment Securities
| shattered investor confidence, which was already damaged by the
| financial crisis. And it led to sweeping changes at the
| Securities and Exchange Commission, which missed the fraud for
| years despite repeated warnings, including from independent
| investigator Harry Markopolos, who set out to analyze Madoff's
| improbable returns and pronounced them fraudulent as early as
| 2000._
|
| It was also a failure of regulators, the whole thing could have
| been avoided with some basic checks.
|
| > _A subsequent investigation by the agency's inspector general,
| H. David Kotz, found that rather than following up on clear
| evidence of fraud, SEC enforcement staffers decided to take
| Madoff's word that his operation was legitimate._
|
| > _"When Madoff provided evasive or contradictory answers to
| important questions in testimony, they simply accepted as
| plausible his explanations," Kotz wrote._
|
| Chase eventually ended up having to pay some fines and changed
| reporting, but ultimately it is amazing he pulled it off with
| just money in an account. Banks will do pretty much anything it
| seems as long as you are capitalizing them as FinCEN reports
| show.
|
| > _In the end, in addition to Madoff, more than a dozen
| individuals, including Peter Madoff, were convicted of federal
| crimes, but none of the others was accused of knowing about the
| fraud. JPMorgan Chase, Madoff's primary bank, paid $2.6 billion
| to the U.S. government and Madoff victims in 2014 to settle
| allegations that it did not maintain adequate controls. After
| Chase instituted some unspecified reforms, prosecutors dropped
| charges against the bank._
|
| [1] https://www.cnbc.com/2021/04/14/bernie-madoff-dies-
| mastermin...
| smcl wrote:
| I have no idea how he coped knowing that he was bound to get
| caught. Whenever I told any white lies as a kid I felt SO
| exposed, nervous and vulnerable. I wonder how on earth he could
| live his life for nearly a couple of decades knowing the was
| bound to get caught. Was he torn apart by anxiety, or was he
| just a "LOL YOLO" type of guy?
| EMM_386 wrote:
| Always worth reading:
|
| The World's Largest Hedge Fund is a Fraud [PDF] Nov 7, 2005
| Submission to the SEC - Harry Markopolos
|
| https://www.math.nyu.edu/faculty/avellane/madoffmarkopoulos....
| aero-glide2 wrote:
| What happened to his General Electric fraud allegations?
| sn41 wrote:
| The accusation sounded credible - his main idea seemed to be
| that GE oversold insurance schemes that were detrimental to
| GE if the average lifespan increased. Which it has.
|
| On the other hand, there were some conflict of interest
| issues - I am not sure what the exact issue was.
|
| But on the whole, the issue seems to have disappeared with
| the great Covid bust-boom of the stock market.
| rozim wrote:
| It is really called out:
|
| "Scenario #2 (Highly Likely) Madoff Securities is the world's
| largest Ponzi scheme"
| Loughla wrote:
| Interesting. I thought he was already dead, or in house arrest.
| He just sort of went away after that whole debacle.
|
| Bernie Madoff was actually what put me back on my heels when it
| comes to investing and capitalism in general. I know it's a hot
| take on reddit, but genuinely - it appears that the only way to
| get punished is to scam people with loads of money.
| guiriduro wrote:
| Yup, scamming per se is rife and as with most borderline
| 'white' white collar crime, largely consequence-free - in sell-
| side analysis for example. But step on the wrong toes...
| anovikov wrote:
| As a person with 21 year of experience in custom software
| development, i struggle to define what "scam" is, at all...
| shadowgovt wrote:
| The law around scams looks a lot like the design of unit
| tests.
|
| On the one hand, you have the full suite of hypothetical
| unethical mechanisms (realized and unrealized) human beings
| could scheme up to unfairly cheat each other out of hard-
| earned resources. Analogous to the full suite of behaviors a
| complex program could exhibit given arbitrary inputs over
| infinite time.
|
| And on the other hand, you have a subset of those behaviors
| carved out and codified as illegal, where a violator will go
| to jail. Analogous to the behaviors a unit test suite can
| rule out.
|
| But unit tests, as we know, are not mathematical proofs of
| soundness.
| soneca wrote:
| Madoff made his ponzi scheme last 17 years with a limited
| network. Imagine how long a ponzi scheme accessible by the whole
| world could last.
|
| Possibly forever (or at least longer than my lifetime). I am
| thinking about Bitcoin here.
| mumblemumble wrote:
| Bitcoin is not, in any way, a Ponzi scheme.
|
| It _may_ be the subject of a bubble, it _may_ be subject to
| market manipulation, it _may_ still play a part in any number
| of scams or frauds beyond the ones that have already been
| identified, some of which themselves may be Ponzi schemes. But,
| even if, for the sake of argment, all of those and more were
| true, Bitcoin itself would still not be a Ponzi scheme. It is
| and would still be just a digital commodity.
| zabzonk wrote:
| Those who got in early made almost infinitely more than those
| who got in later (or who lost) - classic Ponzi scheme.
| petercooper wrote:
| _Those who got in early made almost infinitely more than
| those who got in later (or who lost) - classic Ponzi
| scheme._
|
| So did people who invested early in Apple, domain names, or
| property in Manhattan. I think the bare minimum you'd need
| to define something as being a Ponzi scheme is, well, a
| _scheme_ - that is, an _intention_ to defraud people, and I
| don 't see such intent in the creation of Bitcoin.
| mumblemumble wrote:
| That is something that applies to all sorts of situations,
| and is in no way a litmus test for whether or not something
| is a Ponzi scheme.
|
| For it to be a Ponzi scheme, you first have to have some
| sort of centralized control of the ledger so that you can
| lie to people about the volume of assets they have in your
| care. And already we have made a complete departure from
| what Bitcoin is and how it works.
| user-the-name wrote:
| But there is a lie. The lie is the supposed value in USD
| of the bitcoins you hold.
| ghodith wrote:
| I mean, if the person can transfer them right now for
| that amount in USD how is it a lie?
| mumblemumble wrote:
| Like I said up above, even if, for the sake of argument,
| it were subject to market manipulation, that would still
| not make it a Ponzi scheme. Not every financial crime is
| a Ponzi scheme.
| IMTDb wrote:
| It also works when buying successful startup shares. In
| fact, it applies to almost everything that is successful:
| get in early and reap the benefit.
| user-the-name wrote:
| Bitcoin may or may not _intentionally_ be a Ponzi scheme.
|
| But that doesn't matter, because functionally, there is no
| difference between an intentional Ponzi scheme and Bitcoin.
|
| Bitcoin trading is a negative-sum game. All winning that
| anyone gets comes out of the pockets of newer investors.
| There is no net inflow of value or money that could cover the
| gains people make trading, other than the money being put in
| by other people. There is a net _outflow_ of money, in the
| form of trading and mining fees, but there is no inflow.
|
| So functionally, with Bitcoin, old entrants are paid off with
| the money invested by newer entrants. This is exactly how a
| Ponzi scheme works.
|
| Again, it may not be _intentional_ , but it works the same
| nonetheless.
| mumblemumble wrote:
| Gold works the same way: the mining of new gold creates a
| downward pressure on the value of existing gold. Dilution
| is not the same thing as fraud.
|
| USD also has some similar effects at play. But inflation is
| also not fraud.
| dboreham wrote:
| Bitcoin is as much or as little a ponzi scheme as things
| like the US dollar.
| haram_masala wrote:
| Bitcoin is in some ways preferable, since you're not
| subjected to violence if you choose not to participate in
| it.
| mumblemumble wrote:
| I think you've made a distinction without a difference.
| Bitcoin assets, and income that is denominated in
| Bitcoin, is every bit as taxable under US law.
|
| It's true that attempting to conduct your entire
| financial life in Bitcoin won't save you from receiving
| tax bills that are denominated in dollars. I think your
| more immediate problem, though, would be that it's
| probably impossible for someone living in the US to
| participate in Bitcoin without owing _someone_ a bill
| that they will expect to be paid in USD. It 's difficult
| to transact Bitcoin without Internet access, for example.
| And that'll get you long before the IRS sends police to
| knock on your door.
| karpour wrote:
| This is a comment someone who doesn't understand how
| Bitcoin fundamentally works would write. Just because
| people like to call it a cryptocurrency it does not have
| much in common with the US Dollar.
| shawnz wrote:
| That's still not a Ponzi scheme unless you are also lying
| to investors by telling them that the returns are coming
| from some kind of business venture or something. Investors
| willingly speculating on commodities because they think
| they will rise isn't a Ponzi scheme.
| graeme wrote:
| The possible ponzi is people claiming Bitcoin will
| replace the existing financial system due to its
| intrinsic superior qualities and will go to $1 million
| and beyond. The HODLers don't believe they are merely
| speculating.
|
| Of course that could be true, and people saying it may
| well believe it. Ponzi believed his international reply
| coupon scheme would actually pay out. So to some extent
| it will only be proveable in hindsight.
| shawnz wrote:
| That's not a Ponzi scheme. Misleading investors about the
| potential of a technology isn't a Ponzi scheme. You have
| to mislead them about the origin of the returns they are
| getting.
| graeme wrote:
| If the technology in fact has no such potential I fail to
| see the distinction.
|
| Particularly when the actual mechanism of raising value
| for early investors is convincing more to come in based
| on that narrative, but old investors can only cash out
| from new ones.
| shawnz wrote:
| The distinction is that any investor can form their own
| opinion about the technology equally well. We don't, and
| can't dictate to investors what technologies they ought
| to consider worth investing in.
|
| The mechanism you are describing is the mechanism by
| which every speculative investment works. That's not what
| identifies a Ponzi scheme. In fact it specifically can't
| be a Ponzi scheme if the old investors are aware that the
| returns are coming from new investors.
| graeme wrote:
| > The mechanism you are describing is the mechanism by
| which every speculative investment works.
|
| That's not true. Most speculative investment promise
| revenues if they succeed.
|
| For your last sentence, why would that be true? In the
| case of bitcoin, the early investors have been led to
| believe that later investors will _need_ to invest. But
| this can easily be false.
| shawnz wrote:
| > That's not true. Most speculative investment promise
| revenues if they succeed.
|
| That wouldn't be speculative then (at least not
| completely)
|
| > For your last sentence, why would that be true?
|
| Because it's not a Ponzi scheme unless you are lying
| about the origin of the returns which you are giving to
| investors.
| graeme wrote:
| > That wouldn't be speculative then (at least not
| completely)
|
| Can you give an example of non crypto speculative
| investments which are _not_ expected to produce revenues?
| That's how 100% of business promise to eventually provide
| returns.
|
| Even real estate is rents. Collectibles such as sports
| cards and art are the one exception category I can think
| of.
|
| > Because it's not a Ponzi scheme unless you are lying
| about the origin of the returns which you are giving to
| investors.
|
| Yes that was my point. Bitcoin could be a distributed
| Ponzi, where people make representations about bitcoin's
| eventual value through network value, but it turns out
| there is nothing to it. There's no single agent telling a
| lie but it has the same effect.
|
| To make the limit argument: if bitcoin was run by a
| single person selling coins and claiming their value
| would go up because of network value, but this claim was
| not true, this would be a ponzi correct? Assuming the
| proferred proof was reported coin value appreciation to
| date. (I.e. the returns)
| shawnz wrote:
| > Can you give an example of non crypto speculative
| investments which are not expected to produce revenues?
|
| How about any commodity or foreign currency? Gold, oil,
| etc.
|
| > That's how 100% of business promise to eventually
| provide returns.
|
| Exactly. Since Bitcoin obviously isn't a business, it
| couldn't be a Ponzi scheme (because investors in Bitcoin
| aren't being mislead into believing that the returns are
| coming from a business activity).
|
| > To make the limit argument: if bitcoin was run by a
| single person selling coins and claiming their value
| would go up because of network value, but this claim was
| not true, this would be a ponzi correct? Assuming the
| proferred proof was reported coin value appreciation to
| date. (I.e. the returns)
|
| No, that couldn't be a Ponzi scheme because the person
| isn't lying about the origin of the returns. They really
| do come from other investors. That might be considered a
| pyramid scheme, though.
| mumblemumble wrote:
| > where people make representations about bitcoin's
| eventual value through network value, but it turns out
| there is nothing to it.
|
| That's not a Ponzi scheme, that's a market bubble.
|
| There's nothing gained by misappropriating existing
| jargon just to try and lend more credence to an assertion
| that a thing is bad.
|
| Imagine if someone were trying to argue that a MacBook's
| motherboard is just one big integrated circuit because
| it's a circuit (natch), and solder has been used to
| integrate it all together. On the one hand, sure I can
| why someone who isn't a computer techie might see it that
| way. On the other hand, _that 's simply not what that
| term means._
| Clewza313 wrote:
| Tether, which is apparently backed by Bitcoin itself, fits the
| bill. They've printed $20 billion (BILLION!) new USDT since the
| start of the year, and the rate of Tether printing is currently
| over 4x faster than the rate at which new Bitcoin is being
| mined. And like Madoff's scheme, it can keep going until the
| tide goes out and we find out who's been swimming naked.
| randomguy5421 wrote:
| I sold a month or so ago. I'd rather not hold the bag in the
| end, but at the same time I figured this thing can keep
| running so long as Tether is there to prop it up.
|
| Tether just printed another 2 billion USDT today, and didn't
| they print another billion USDT a few days ago?
| Aperocky wrote:
| lol it's called fiat currency.
| darknavi wrote:
| The stock market in general. The last few years have really
| swoon us that the stock market is 100% "funny money" that goes
| up and down purely based on opinion.
| splistud wrote:
| Buying equities in our society is done on a voluntary basis.
| What other possible pricing mechanism could there be other
| than people's opinion of what an equity is worth? If you want
| to throw your hands up in the air and call it funny money,
| because you don't understand what you're seeing, that's fine
| I guess. But understand the deficiency is yours, not the
| nature of the market.
| danans wrote:
| > goes up and down purely based on opinion.
|
| Not opinion as much as fear and greed.
| purple_ferret wrote:
| The current iteration of crypto yield farming seems more like a
| classic ponzi scheme to me.
|
| "Here I invented this new coin. If you buy it and lock it up,
| you can generate new ones which you'll be able to sell to
| others who'll want to get in on it to. This coin serves no
| other purpose than this though."
| jsight wrote:
| I'm not sure that I see how it could be a ponzi scheme.
| Ultimately, everyone has as many bitcoins as they believe that
| they have. The only question is how valuable are those coins?
| That should always be a function of market demand.
| MereInterest wrote:
| Money goes in, with the promise that you will get more money
| out at the end. While this works in some cases (e.g.
| investing in a business that produces value), in this case
| the only other money in the system comes from other people
| buying into it. Therefore, I believe bitcoin to be equivalent
| to a ponzi scheme.
|
| Implicit in this is the assumption that bitcoin does not
| provide value in itself, which is another discussion
| altogether.
| jsight wrote:
| > Money goes in, with the promise that you will get more
| money out at the end.
|
| I'm not aware of any such promise.
| solveit wrote:
| > Money goes in, with the promise that you will get more
| money out at the end.
|
| Who promises?
| LanceH wrote:
| When you buy bitcoin, you get a share of the whole of
| bitcoin. You buy this at the current market value. You may
| hope it goes up, but it may not. You buy 1 bitcoin at
| market price, you have 1 bitcoin at market price.
|
| In a ponzi scheme, you buy in at a fictional price and are
| paid interest derived from the investments of future
| investors. Bitcoin purchasers don't receive anything from
| future investments unless they actually sell, again at
| market price.
|
| The word here is speculation, not ponzi. It's no different
| than buying/selling land that people may or may not want.
| kingsuper20 wrote:
| or the $USD.
| inglor_cz wrote:
| Pay-as-you-go retirement systems depend on having enough young
| people entering the workforce. Preferrably qualified ones that
| can be taxed.
|
| Now that developed countries have mostly sunk below 2 kids per
| woman and most developing countries do not have school systems
| good enough to provide enough qualified workers to immigrate,
| we are feeling the slow press of unsustainability of the
| system.
|
| Unless we can offload a lot of that press on robots, people
| will have to work until their late 70s. The original Bismarck
| pension scheme calculated with only 2 years of survival in
| pension on average. We have expanded it to almost 20, it will
| have to be reduced again.
| [deleted]
| tim333 wrote:
| Bitcoin isn't really a ponzi scheme though, just an asset that
| gets bid up. In a ponzi you pay in x and are promised x+50% or
| some such and the scheme fails when there isn't money to pay
| out x+50%. With bitcoin you buy for price x and sell for price
| y which may be higher or lower. Different thing. It can't fail,
| just go up or down in price.
| ForHackernews wrote:
| So your theory is that unlike Ponzi members, bitcoin buyers
| aren't paying in $x hoping to take $x+500% out in the future?
| Intriguing.
| tim333 wrote:
| I hope lots of things I own will go up in value. That
| doesn't make them ponzi schemes.
| rcxdude wrote:
| Well, probably the biggest thing is it's not promised, and
| any returns are not being fabricated (a ponzi scheme will
| generally promise X% return, and will claim to have made X%
| on the invested money, when in reality they have made no
| return. When you buy bitcoin you get some bitcoin, which
| may or may not go up in price, but it's clear what you do
| and don't have).
| supercanuck wrote:
| What about tether?
| saalweachter wrote:
| Eh, I'm comfortable calling Bitcoin a Ponzi scheme because
| all profits extracted by early investors come from later
| investors.
|
| That's, like, a very specific and applicable definition.
| kolinko wrote:
| So you just redefined a the name ,,Ponzi" to mean something
| else than the commonly accepted definition.
| saalweachter wrote:
| Here, let me google that for you:
| https://www.google.com/search?q=ponzi+scheme+definition
|
| Pon*zi scheme
|
| /'panze ,skem/
|
| noun
|
| a form of fraud in which belief in the success of a
| nonexistent enterprise is fostered by the payment of
| quick returns to the first investors from money invested
| by later investors.
| 8fGTBjZxBcHq wrote:
| Well you used to be able to buy drugs and child porn with
| it so it's not a nonexistent enterprise. /s
| quchen wrote:
| Ponzi is also derogatory. You should not dismiss the fact
| that Bitcoin kicked off blockchain as a technology, got a
| lot of people into a sort of financial playground, had
| questionable value and utility initially, and all that.
|
| All that considered, you might still call it a Ponzi
| scheme if you really wanted to, but it certainly isn't
| _only_ a Ponzi scheme.
| diarrhea wrote:
| > Bitcoin kicked off blockchain as a technology
|
| "Started at the bottom, now we a little bit above the
| bottom"
| karpour wrote:
| Pretty spot-on! I think it's fair to call Bitcoin a ponzi
| scheme, it is not and will not be a stable currency, it's
| value isn't backed by anything and it _needs_ constant
| new investment to work at all.
| tim333 wrote:
| That's not really a good definition, dragged up by the
| Google bot without a link to the source. It says
| "Definitions from Oxford Languages" but I'm having a job
| finding where that was from.
|
| https://www.oxfordlearnersdictionaries.com/definition/eng
| lis...
|
| was kind of similar and has " a plan for making money
| that involves encouraging people to invest by offering
| them a high rate of interest and using their money to pay
| earlier investors. When there are not enough new
| investors, people who have recently invested lose their
| money."
|
| which I think is what is usually meant by a ponzi scheme
| and is different from bitcoin.
|
| Even with your definition bitcoin doesn't really fit:
|
| "form of fraud" - bitcoin was completely open about what
| you were getting from the start
|
| "nonexistent enterprise" - the first and largest
| decentralized digital payments system. The more legit
| complaint is the enterprise is wrecking the environment
| more than it doesn't exist.
| saalweachter wrote:
| I'll admit, Ponzi schemes could be considered centralized
| by definition. It _might_ be more accurate to describe it
| as a pyramid scheme -- because investors become a part of
| the scheme, actively seeking more investors from whom
| they hope to recoup their investment -- or a pump-and-
| dump, focusing on the market component.
|
| Re: Bitcoin as a digital payments, my complaint there
| would be that Bitcoin is not structured to return
| transaction fees to people buying Bitcoin as an
| investment.
| Ekaros wrote:
| I don't think Bitcoin is any type of scheme. It's just a
| typical bubble. As a new asset class. Nothing special or
| schemis about it.
| Hallucinaut wrote:
| Possibly fair to exclude Bitcoin from that definition,
| being the first and essentially a research project let
| loose... but what about 1000+ dead coins?
| shawnz wrote:
| There is no nonexistent enterprise in this case. Nobody
| is claiming that the returns of cryptocurrency
| speculators are coming from a business venture.
| hctaw wrote:
| the nonexistent enterprise is the use of bitcoin as a
| medium of exchange
| shawnz wrote:
| Bitcoin actually functions as a medium of exchange and
| that's not an enterprise anyway.
|
| Is there an expectation that by buying Bitcoins, you are
| funding the growth of a business which creates profits by
| using your investment, and those profits are where your
| investment return is coming from? If that's not the case,
| then it isn't a Ponzi scheme.
| squeaky-clean wrote:
| > Is there an expectation that by buying Bitcoins, you
| are funding the growth of a business which creates
| profits by using your investment, and those profits are
| where your investment return is coming from?
|
| If you think this isn't a common viewpoint, you need to
| lurk on some bitcoin forums and discord servers.
| shawnz wrote:
| That's not the only condition though. It is not enough
| for some crackpot evangelists to believe that. It must be
| a purposeful deception in order to get the investor to
| give you money for something different than what you
| claimed.
| saalweachter wrote:
| Yeah, but ... I am constantly told that Bitcoin (et al)
| is the future, that it is revolutionary, that it is going
| to be big in some way -- that it will replace "fiat"
| currencies, for instance, although the exact way it is
| going to be big has changed over time.
|
| That some people are making money hand over fist by
| investing is then used as proof that it is a good
| investment.
|
| That the fake enterprise is just lazy meta-financial-
| jargon rather than a more effort-full fake building
| project or an imaginary hedge fund with fake books and
| blueprints and a fancy office and whatnot isn't enough to
| make the definition inaccurate IMO.
|
| Quacks like a duck, etc.
| shawnz wrote:
| Misleading people about the power of a technology doesn't
| make something a Ponzi scheme. You need to mislead
| investors about the origin of their returns. Purposeful
| speculation isn't a Ponzi scheme even if the speculators
| were misled about the thing they are speculating on.
| JMTQp8lwXL wrote:
| That's how the stock market works as well.
| saalweachter wrote:
| There is certainly zero-sum speculation within the stock
| market, dwarfing that in Bitcoin, sure, but the S&P 500
| also pays out half a trillion dollars in dividends a
| year, and buys back a similar amount of stock from the
| profits of the actual businesses being invested in
| through the stock market.
|
| A trillion dollars a year funneling from business profits
| to investors is the difference between the S&P 500 and
| Bitcoin.
| minwcnt5 wrote:
| Gold might be a better example then.
| saalweachter wrote:
| Eh, gold is probably more analogous to houses.
|
| The current price is largely a product of the speculation
| in the market, but at the same time ... a lot of people
| buy houses just because they want to live in them. So you
| have people buying houses at two, three times the price
| they'd be paying without the pure real estate investors
| speculating up the price, but at the same time, they're
| just buying them because they want a house and will pay
| the absurd price.
|
| Likewise, there's a huge amount of speculation in the
| gold market, and that's probably what defines the price
| of gold, but at the same time, something like 50% of
| newly-mined gold goes to make jewelry, and most people
| buy it because they want it, even though [or because] it
| is over-priced, and they aren't buying it as an
| investment, just a pretty thing to have.
|
| That doesn't mean that gold or houses are _good_
| investments, or that the markets aren 't going to crash
| to a tenth of their current valuations next month or ten
| years from now, but it does mean there is a second
| component to the market -- you have speculators
| interacting with consumers, and the speculators can
| extract money from consumers who will buy the underlying
| good even at a bad price.
|
| (Oddly, I'd say house buyers are more-expecting to get
| the money they invested back at some time in the future,
| compared to gold jewelry buyers.)
|
| [But what do I know, I'm just a jerk on the internet
| saying things.]
| shawnz wrote:
| It doesn't matter if all the activity is 100%
| speculative, that is still not a Ponzi scheme. Maybe you
| might call it a bubble, but it isn't a Ponzi scheme.
|
| In order for it to be a Ponzi scheme, speculators would
| have to believe they are actually investing in a business
| which uses their investment to generate profit, and not
| simply speculating against other investors. The investors
| must be misled about the actual source of their returns.
| [deleted]
| [deleted]
| paulgb wrote:
| In the book Lying for Money (which I recommend to anyone),
| Dan Davies makes the point that "paying off early investors
| with later investor's money" isn't sufficient to make
| something a Ponzi because that's really the nature of
| nearly _all_ financial fraud (cheque kiting, for example).
|
| I think we agree on the mechanism at play though, it's just
| a semantic distinction.
| jaredtn wrote:
| This is how literally every financial asset works.
|
| If you want to make a customer cash-flow argument, Ethereum
| has $9B of ARR. Same story.
| slg wrote:
| So the only difference is that returns aren't guaranteed at
| either the upper or lower bounds? Sounds like a Ponzi scheme
| just with more risk.
| yummypaint wrote:
| The nature of ponzi schemes necessitate exponential growth,
| even if the doubling time can be made long, perhaps on the
| scale of years. This places a short bound on how long they can
| last. The US has about 1/20th of the worlds population, so
| that's less than 5 doubling periods before you run out of new
| marks. Maybe an additional decade or two at best?
| paulpauper wrote:
| compounded interest has exponential growth and is as risk
| free of an investment as one can find.
| yummypaint wrote:
| The key difference is that banks aren't ponzi schemes. They
| use your money to actually do things in the world to make a
| profit, and give you a cut in the form of interest. A ponzi
| scheme doesn't make any new money, it only redistributes
| money among its members. This is the fundamental reason
| they can never be sustainable, and require the majority of
| those invested to be relatively new to the scheme.
| Applejinx wrote:
| The challenge there (and the exploit being attempted) is the
| 'too big to fail' concept.
|
| If you don't have enough people signed up, your ponzi can fail
| because a sufficient number of people who haven't fallen for
| it, can object.
|
| If you manage to get everybody signed up, it becomes necessary
| to not break your scheme, since everybody loses.
|
| I think this is like an unholy hybrid of the ponzi scheme and
| the Silicon Valley unicorn. It's the great exploit: if you can
| burn everybody, hard enough, you win forever. You blow up past
| the point where there is any possible remedy.
| FooHentai wrote:
| S'funny, I was thinking about fractional reserve banking and
| post-2008 economic stimuli.
| xutopia wrote:
| Why is Bitcoin different than gold though? Is gold also a Ponzi
| scheme?
| jedberg wrote:
| The value of gold is supported by huge militaries all around
| the world, including the US military. Just like fiat
| currency, it derives its value in part from the large group
| of people with guns willing to commit violence to support its
| value.
|
| Bitcoin doesn't have an army of people willing to commit
| violence to support its value. At least not yet.
| simonh wrote:
| You do realise the gold standard was abandoned a long time
| ago. What are they going to do, force people to buy it at
| gunpoint?
|
| Back in the 60s the gold trade was highly regulated. That's
| why the plot of Goldfinger doesn't really make any sense
| from a moderns perspective. It seemed quaint even to me as
| a teenager in the 80s. Nowadays gold is just posh bitcoin.
| jedberg wrote:
| I'm aware that we aren't on the gold standard, but the US
| still has the largest store of gold in the world, and
| uses its army (and courts) to defend the value of gold.
| Along with the next top three holders, Germany, France,
| and Italy.
| michaelt wrote:
| Arguably nothing.
|
| Except with gold, there's a history of greater or lesser
| fools buying it from you that goes back thousands of years;
| there are a great many non-scam businesses trading in it, and
| they ain't come out with many new precious metals in my
| lifetime.
|
| Cryptocurrencies have a much shorter history, an
| exceptionally large number of scams, and nigh-limitless
| supply of new types of coin and token.
| hudon wrote:
| Gold is found in nature. We can't manufacture it or change
| its atomic number. Bitcoin is human code run on human
| machines. If society or the powers that be see fit to
| generate infinite Bitcoin, they can (ie forks are political
| power plays and we can't control how the powerful will coopt
| Bitcoin in the future).
| adventured wrote:
| Nature created Bitcoin.
|
| There's absolutely no reason why humans can't create a
| store of value with superior qualities vs gold.
|
| Humans are of nature. Everything we do is of nature
| accordingly. There is no separating humanity from nature,
| we are contained within it and we were created by it.
|
| Nature = that which exists, all encompassing, no
| exceptions. It's not a technicality, it's the fact of what
| nature actually is (versus what some people like to pretend
| it is: fantasy pristineness, perfection, devoid of humans).
| dTal wrote:
| We can't manufacture it or change its atomic number, but
| the powerful can (and have) manipulated its "value" in all
| the same ways as they could manipulate bitcoin. They can
| buy up supply, insist that taxes be paid in it, or threaten
| to lock up anyone who mysteriously comes across a large
| amount of it.
|
| Gold's status as a physical element is basically
| irrelevant. Bitcoin is basically gold you can email.
| tim333 wrote:
| >If society or the powers that be see fit to generate
| infinite Bitcoin
|
| But not real ones. It's like saying you can make infinite
| Mona Lisas with a colour photocopier.
| hudon wrote:
| No. Real ones. The supply cap is just decided by a coded
| algorithm. That algorithm can change and the social
| consensus can and will accept that change. Democracies
| moved off of the gold standard didn't they?
| jcbrand wrote:
| It won't be the real one, it will be a fork.
|
| Not everyone will accept such a change, so the original
| 21 million version of the network will still exist and
| will by many be considered the real bitcoin.
| hudon wrote:
| Sure, and I can try paying for gas with gold but at some
| point I'm forced to do what the herd is doing, and the
| herd doesn't care about arguments of "sound money",
| they'll just follow whatever monetary policy the ruling
| class decides is best.
|
| The herd coming into Bitcoin as we speak implies a
| weakening of its founding values.
| jcbrand wrote:
| You can buy gas in a depreciating currency and save in
| something else, like people have been doing with gold for
| thousands of years.
| ForHackernews wrote:
| Who decides what is a "real" bitcoin? This is the point
| parent commenter is making. The only difference between
| Bitcoin OG and Bitcoin Cash or Segwit or any of the
| others is some kind of vague consensus that everyone
| agrees to pretend one magic bean is more special and
| valuable than the other, less-special magic bean with the
| same name.
| jcbrand wrote:
| The real Bitcoin will be the one that the market prefers.
|
| Why is Gold coins more valuable than copper coins?
|
| Why is the original Bitcoin more valuable than any of its
| forks?
| ForHackernews wrote:
| You're agreeing with me and the grandparent comment.
| jcbrand wrote:
| It's not some kind of vague consensus, just like it's not
| some vague consensus that gold coins are worth more than
| copper coins.
| ForHackernews wrote:
| > the one that the market prefers
|
| What do you think markets are? They're a method for
| people to come to a vague consensus about the value of
| something.
| dilippkumar wrote:
| Not GP, here is my thesis.
|
| Right now, on coinbase, rate of bitcoin purchases paid in
| dollars > rate of dollars purchased in bitcoin. Anyone who
| wants to exit bitcoin today is getting dollars from people
| buying into bitcoin.
|
| When this changes (for whatever reason), coinbase and other
| exchanges have a limited capacity to buy back bitcoins for
| dollars, assuming they would even want to do that in the
| middle of a run on crypto exchanges.
|
| If bitcoin was a viable currency, then people buying bitcoin
| today would never want to trade it back for dollars. But
| that's not happening- everyone still buys groceries, coffee,
| gas, tools and computer software with dollars. A run on
| coinbase is a problem when bitcoin is an "investment" and not
| an actively used currency.
|
| Finally, Monero has shown that there is still plenty of room
| for innovation beyond what bitcoin currently implements. If
| crypto currencies are the future, already Monero looks like a
| more viable option than btc (note that all the illegal stuff
| that used to happen with btc is now happening with xmr on the
| dark web). It's very possible that even Monero isn't the
| final incarnation of the ultimate crypto currency and
| something even better will replace it one day.
|
| A new crypto doesn't threaten people who want to transact
| with that currency. Everyone on the darkweb markets switched
| from btc to xmr and business continues as usual, and it will
| continue even when the next evolution arrives. But those who
| see it as a store of value are at the mercy of everyone else
| buying that currency more than how much everyone else is
| selling- a classic ponzi scheme.
| OscarCunningham wrote:
| "rate of bitcoin purchases paid in dollars > rate of
| dollars purchased in bitcoin"
|
| Why don't these two numbers have to be equal?
| dilippkumar wrote:
| "Rate" here meant the first derivative of the number of
| transactions. Not the "btc <--> usd exchange rate"
|
| An equivalent way to say the same thing is:
|
| "number of bitcoins being purchased with USD per hour >
| number of USDs being purchased with bitcoin per hour".
| OscarCunningham wrote:
| There's one buyer and one seller in every transaction.
| dilippkumar wrote:
| Right. One of them is coinbase.
| Applejinx wrote:
| In an abstract enough sense, Jeff Bezos is a Ponzi scheme :D
|
| ...okay, then: Elon Musk.
| assface wrote:
| Gold has material use. You can make things with it.
| Icathian wrote:
| Okay, but the value of gold has basically zero relationship
| to it's industrial or commercial uses, so that isn't really
| relevant here.
| ddevault wrote:
| Gold is also the most reasonable element to use as a
| store of value. It isn't very reactive or radioactive, so
| it's stable for long periods of time, it's a solid at
| room temperature, it's not hazardous to human health,
| it's easily manipulated and formed, and it's not super
| abundant but also not super rare. Silver is the only
| other element that comes close, and it tarnishes.
| lotsofpulp wrote:
| There could be some value attributed to being able to use
| gold as a store of value and currency in the event of a
| dissolution of modern society such that the internet or
| widespread electricity is no longer around.
| rainbowzootsuit wrote:
| In that situation, the inability to eat it or shoot
| something with it is probably going to make gold/silver
| pretty close to worthless as well until society re-
| exists.
|
| Even if the US government ceases to exist, the features
| of non reproducibility built into cash dollars
| (watermarks, intaglio printing) would still exist
| although they won't be as ultimately durable into the
| future as an element. At least you can also use them as
| fire starters.
| jpdb wrote:
| Paper money has a lower bound of material value equal to
| $(toilet paper - utility value for the comfort of toilet
| paper over a dollar bill) per square inch.
| booleandilemma wrote:
| By that point you're going to have bigger things to worry
| about, like where to get fresh water and go to bathroom.
|
| And people with guns are going to quickly steal your gold
| anyway.
| danielbarla wrote:
| Sure, but this is based on the idea that the innate uses
| and value of gold would be similar (or "relatively high")
| after such a transformation of the world. This is not
| clear to me at all, compared to say, a similar wealth
| invested into a large cache of firearms and ammo. Or
| whatever will happen to be useful, depending on the
| scenario.
|
| It reminds me of an anecdote from my grandfather from the
| end of WW2, people were giving away gold rings for loaves
| of bread. (Clearly, only when in desperate need, but it
| did happen.)
| lotsofpulp wrote:
| Firearms and ammo are a necessity, but one person/small
| tribe can only defend against so many others. What you
| really need is a community (or bigger tribe) that will
| come to your aid, and the community will need to be able
| to trade between themselves and others, which is where
| gold comes in.
| teawrecks wrote:
| Then why don't we all use gold as payment?
| jcbrand wrote:
| We used to (indirectly at least) until 1971 when the US
| went off the gold standard in order to not be bankrupted
| by the Vietnam war
| pen2l wrote:
| Is a ponzi scheme that lasts forever... a ponzi scheme? Because
| if it lasts forever, there's no loser!
| TwoNineA wrote:
| Oh no!
|
| Anyways ...
| skeeter2020 wrote:
| >> "Bernie was by no means perfect. But no man is."
|
| Compared to Madoff most of us ARE perfect. I have no doubt he
| felt sorry for his actions once caught and punished, ut this is
| not the same thing as regretting them enough to voluntarily work
| at change your ways. Good riddance.
| nathanvanfleet wrote:
| > He was soft spoken and an intellectual. Bernie was by no means
| perfect. But no man is.
|
| Actually in comparison to Madoff and as someone who hasn't stolen
| $19 billion dollars I feel relatively perfect. It's funny how
| someone who might steal something worth a few hundred dollars in
| an instant are somehow not given the second chances of people
| like Madoff who was operating a much larger criminal scheme over
| 15 years.
| [deleted]
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