Is capitalism a pyramid scheme?

Question

A company which doesn't make bigger profits than the year ago quarter will lose stock value. All companies continually have to grow to maintain value. American consumers are constantly being given a larger line of credit with lower interest rates, even though many have no way of making the payments they are already commited to. When is it all going to collapse like some AMWAY scam, and what are you doing to prepare for it?

Answer 1

The solution is not to be a retard and keep borrowing money.

Those of us who are in good shape financially tended to live cheap when we were younger and save every penny we could.

Answer 2

Uh, no, you are completely wrong. Yes companies try to grow, but if you paid attention at all you'd know there is a cycle of creative destruction. Companies and whole industries come and go and are superseded by new companies and industries. They go through cycles of growing and shrinking and redefining themselves, all the while capital and resources are repositioned to where they are more productive. It's nothing like a ponzi scheme.

I'm not sure where you get your paranoia about bad loans. Banks are careful about lending money and managing risks, as are buyers of bonds. No, people do not generally continue throwing money into companies that are sinking -- or else no company would ever go bankrupt. Bankruptcy of one company is not a problem to a bank or lender that keeps a well diversified portfolio just for that very reason of managing risk.

Apparently you're not aware of this but there are millions of professional and enormous markets devoted to analyzing the financial health of companies and determining risk. There are several well known debt rating systems that grade companies' viability as they get into trouble or emerge out of it, and government agencies even regulate the various activities.

People a lot smarter than you have spent many decades building systems and infrastructure, markets and policies, that do an incredible job of managing and deploying capital. Open up a Wall Street Journal and start learning something about it.

Answer 3

These negative views on capitalism are based on a poor view of economy as being a zero sum game. One person said that rich can't get rich until people are poor. Wrong. EVERY transaction we make is for OUR OWN WELL-BEING, or at least compared to all our other choices. WE decide what we buy. This isn't Vegas where to have a winner, we must have a loser. That isn't to say that we don't have losers in our economy, as a whole our economy keeps getting better off. Just 100 years ago and of course adjusting to real terms, the poverty of today's society, roughly more than 8000 for a single person, was only achieved by people in the top 10% of income earners. The economic slice of pie each person gets is still getting bigger.

All the nay-sayers seem to think there is some conspiracy of rich people trying to make the world poor. But, answer me this, if the world is so poor that they can't afford goods and services that these business' provide, how will they survive? Would it actually be in their best interest to make people poor?

Answer 4

In a way, I think you are right. Under capitalism, we all can't be billionares. In a company, you have the top leader, next managers, and then supervisers, then workers. The numbers increase as you move down the pyramid. The top gets most of the money funneled up from the bottom.

Every employee who thinks they are making $15 per hour is actually giving $15 up to the next level. The next level makes $30 per hour but is giving $30 plus the lower level's $15 per hour. It continues to move up the pyramid to the top.

The rule of thumb in hiring is to make as much as the person makes. So if you are paying someone $15 per hour, you charge $30 per hour to the end customer. What keeps people in a pyramid is the inability to find and develop customers.

The concept of employees and employers is a pyramid scheme. Under capitalism, you make more money by building a pyramid then by coming up with ideas to sell.

In the end, a pyramid will outgrow its resources and be destroyed. In its quest for survival, a corporation pyramid will leach onto government contracts to maintain its pyramid. Consumers won't pay the needed higher prices.

Answer 5

Numbers are infinite therefore we can always tweak numbers to our social and economical needs. there are more Billionaires today than Millionaires 10 years ago. As our social economical needs changes so do the numbers, that's why we have the government telling us when interest rates, taxes, wages etc should go up or down and than they print as much money as they want and say its backed up by gold, and then they in turn place the value of gold to what ever they want or willing to sell it for. so my friend there could never be a collapse so many people became rich during the great depression and many more became poor it was just a change of tides. If you look at it, it is all a numbers game. Money can never run out as long as we are printing it, and trading it for resources, anything can be a resource as long as there's a demand for it. you just got to be willing and able to sell what ever is in demand.

Answer 6

No, capitalism isn't a pyramid scheme. In capitalism, everyone benefits from the work that they do. Under socialism, only the State, and those that control the State (i.e., not you), benefit.

And the notion that the Rich can't get rich without others being poor is just plain silly.

The opposite of 'poor' isn't 'rich'. The opposite of 'poor' is 'not poor'.

And, at least here in the U.S., being 'poor' is largely one of choice. People choose to drop out of school, they choose to have children they can't afford, they choose bad relationships, they choose not to work, they choose to abuse drugs and alcohol, etc.

Answer 7

That is a good analogy. There is a bubble that will burst. Right now the average consumer is bearing a debt of over 5,000 a year per person, take the average HH size of 4 people, and you are at around 20,000 in debt per family, which is about the average income for a family of four. The illusion is that we are an earning society when in fact we have only the illusion of accumolation of value, when we only have the accumulation of debt. The very currency system we have is set on the beleif that it is worth something, which, like a religion is only a belief. If we loose faith in our economy it will colapse. So then my question back to you is, do we have enough faith to keep our economy alive?

Answer 8

grease up my crossbow and make a huge bonfire of bills.
i completely agree, btw. the people at the top can't get rich until the people at the bottom are poor.

also, jollywhatever sounds rich.

Answer 9

history repeats itself... i hope u know... clock is ticking..