Lesson

A 1-post collection

One important lesson on economics from someone who's picked up on a few things...

Put basically: If they’re offering it to plebes like you, the bubble is about to burst.

There are numerous economic bubbles in past and present. The stock bubble. The internet bubble. The housing bubble. The quantum chocolate bubble. Okay, I just wish there was a quantum chocolate bubble…

The point is, bubbles are just like pyramid schemes. Sooner or later, they’re going to run out of people to sell it to and the whole shebang is going to fall on top of whoever’s stuck on the bottom.

That usually means the “sucker” portion of the common throng. The people who believe they’re going to get rich by investing everything they own on a shanty-house in BF-nowhere that the bank says is worth tons and that said people can’t possibly repay inside of ten lifetimes.

The people who genuinely believe that sending a letter to five friends will result in a vast fortune arriving to them by mail.

The people who really think that some wealthy person in Nigeria [or wherever] is going to launder their millions through a plebe’s bank account.

And the people who think pyramid schemes really, really work.

Let me run through some math. Person A decides to start a little scheme selling otherwise worthless pieces of paper as part of a pyramid scheme. He sells to ten people and gives instructions to each to sell to ten more. They remove their names once they’re at the top of a list of ten people.

On the first iteration [the first sale] there are 11 people in the loop.

Second iteration, 111 have bought in

Third, 1111.

Fourth, 11111. Fifth 111111. By the sixth iteration, you’ve reached over a million people. By the ninth, one billion.

There are about sixty billion people on this earth, the last time I checked. At that rate, you’re going to run out of suckers. And the last people to buy in are always the first to cop the consequences of falling for it.

Same principle with [Mad-Lib here] bubbles. The richest people get hold of said maguffin first, and sell it at inflated prices to those lower in the economic scale as an investment opportunity. Increased demand equals increased value, and a few of the lower echelon sell it down, again at an increased price, to those slightly beneath them.

Lather, rinse and repeat for a few iterations and Joe Schlubb and his neighbours are all desperately trying to sign you on to Maguffin Inc.

Only the skeptics can survive bubbles with their fundings intact. Them, or the people who started it in the first place.

If you’re at a sales pitch and they mention the wealthy’s secrets to getting rich, leave. That’s a sure sign you’re about to be bubbled.