Name a financial arrangement/system where current investors’ profits are dependent on cash from new investors.
If you said a Ponzi scheme, you would be correct, but if you said publicly traded stocks, you would also be correct.
Before I explain why stocks are a Ponzi, let me first make a distinction. I’m not saying all stocks are Ponzis, just the ones that perpetually don’t pay dividends. Why? Because there are two ways investors can make money in stocks. One is from dividends, and the other is through capital gains by selling the stock in the future for more than the purchase price.