A Ponzi scheme is a ‘fraudulent financial operation that pays returns to investors out of the money paid by subsequent investors rather than from profit.’
Honestly, I had never heard of a Ponzi scheme before news of Madoff’s financial activities broke.
However, I think the concept of a Ponzi scheme is intuitive…
Instead of ‘pay it forward’, it’s more like ‘debt it forward.’
Kind of like Social Security.
It works beautifully until the influx of new money stops.
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Anyways, I’ve been getting pretty into the work of Andrew Bacevich. I recently heard him on BBC Radio talking about his new book, The Limits of Power: The End of American Exceptionalism.
I found an interview he did w/ Bill Moyers, and the idea that the American economy is run as a ‘de facto ponzi scheme’ comes up.
Moyers and Bacevich get into it a little bit at about 14:00 into this video:
American policymakers “been engaged in a de facto Ponzi scheme, intended to extend indefinitely the American line of credit.”
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Bacevich goes on to track the tipping point of living beyond our means to the 1960s under LBJ and talks about what consumerism has done to American freedom.
It’s worth checking out. He lays stuff out really brilliantly.
I think his delivery is pretty interesting on a performative level too. You can tell he’s deeply passionate but extremely tempered and disciplined.
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He also inserts Jimmy Carter as a kind of retrospectively prophetic voice.
Bacevich talks about Carter’s Malaise speech as a clarion call for a more self aware, culturally aware America.
Check out this excerpt:
The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.
The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.
The confidence that we have always had as a people is not simply some romantic dream or a proverb in a dusty book that we read just on the Fourth of July.
It is the idea which founded our nation and has guided our development as a people. Confidence in the future has supported everything else — public institutions and private enterprise, our own families, and the very Constitution of the United States. Confidence has defined our course and has served as a link between generations. We’ve always believed in something called progress. We’ve always had a faith that the days of our children would be better than our own.
Our people are losing that faith, not only in government itself but in the ability as citizens to serve as the ultimate rulers and shapers of our democracy. As a people we know our past and we are proud of it. Our progress has been part of the living history of America, even the world. We always believed that we were part of a great movement of humanity itself called democracy, involved in the search for freedom, and that belief has always strengthened us in our purpose. But just as we are losing our confidence in the future, we are also beginning to close the door on our past.
In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns. But we’ve discovered that owning things and consuming things does not satisfy our longing for meaning. We’ve learned that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose.
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