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You could look at Yahoo in the boom years as a Ponzi scheme. They made a lot of money from advertising start ups which was funded in part because Yahoo was making a lot of money. You can say the same thing about most bubles but a true Ponzi scheme runs out of money where after a housing bubble there are a lot of houses even if there are far more than we need.

The secret to macro-economic effects is how they alter the overall efficiency of the economy. Does people overpaying for housing cause damage? Yes, because people build much better houses than they need and people who think they have a lot of money waste a lot more of it. However, the US housing bubble was still fairly minor and it's only really scary because things are still over priced and few living people know how to deal with really hard times.

PS: Money is a signal for wealth creation, but it's not wealth. Forget it and things start to break down.




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