We've seen it before; Minsky suggested it as so. Financial gaming is always ponzi-like with the inevitable suckers.
The question is how to control this. Well, there are several ways, but they require some toning down of the aura of money and related luxury. That is, are the richest the smartest?
Gains in equity are not 'real' profit, even though the government likes to tax these supposed gains. Or, it used to tax them more; lately, the tax takings have been reduced. No, the supposed gains in equity are nothing than more money coming into a game, not unlike what Madoff was doing, except it's a little more subtle and considered smart.
Is there not a major industry set up just to handle money going in and out of the equity market? And, is there not a whole lot of technology devoted to tracking this money and to allowing almost infinite gaming on slight differences (derivatives)? Yes, the whole industry is suspect from its very foundation.
But, 'real' profit determination would require putting money on something other than a gab standard, plus a few other things. That implies people doing things other than just moving around virtual bucks, such things as making food or being involved with other essentials.
So, to get it right will require some hard choices.
08/01/2013 -- Ben cannot unwind or taper down; he has too many Doves. We'll have to get back to the king thing (yes, the divine rights of the CEO, new royalty, in other words) and dampening of these types by a new outlook (Magna-Carta'ísh).
08/27/2009 -- Madoff exemplifies (albeit somewhat indirectly) systemic risk.
04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.
01/26/2009 -- We need to consider 'derivatives' in various connotations.
12/17/2008 -- We'll use made-off in lieu of ponzi, henceforth.
12/16/2008 -- Shoes continue to drop, but they are of several types.