It still makes more sense to borrow against the real estate and use that. So this translates into, "I make so much money in my genius business plan that I can assume all the risk, keep only a tiny sliver of the profits, and the people I choose to share my bounty with -- those who would invest in something that looks exactly like a Ponzi scheme".

Show me one that promises over 20% APR and claims no or low risk and I will question it.

First, I don't think that moral argument works. If I eat a banana, is that using violence to get what I want? Well, yes if it's your banana. But no, not if it's a mine. So that argument translates into an absolutist argument for defense of property rights.

Now, I actually agree with the absolutist argument for defense of property rights. The problem is, it just doesn't apply to the world we currently live in. It puts you straight into the transition problem. Who has morally clear title to "my house"? Well, right now, nobody, and it's not clear how anyone could get it.

There's no compromise involved. I still fully intend to condemn the state when it does wrong. And while I accept that concepts behind NAP, it makes a lousy rallying cry because it's a dishonest version of "property rights are absolute".

If the operator is taking 100% of the risk of default, why would he want to settle for a sliver of the profit? It makes no sense. If he had the funds to insure the investors against default, why wouldn't he just lend those? It just doesn't make any sense.

I also find it very strange that he thinks he will be "slowly building [his] reputation here" by operating what looks precisely like a scam. If he's right, that's an incredibly sad commentary on this community.

This is the first post (at least as far as I remember) that I agreed with so strongly I had to post just to say that I agreed with it.

Correct.

It doesn't matter who does the lying, so long as the people whose money is used to make the interest payments have been lied to.

That's not the point. If someone hires me to find a hitman to kill their wife, and I do so, I'm still just as responsible for the murder as the hitman is. This is true even if I find the best and most reliable hitman and fully keep my agreement with the person who hired me.

They are Ponzis. The "interest payments" they make are actually the result of fraudulent transfers from other investors. If you invested in a PPT, you hired the PPT operator to make you the recipient of fraudulent transfers of money Pirate collected from "investors", just as people who invested directly in Pirate did.

Even chastity?

Yes, that's a fair summary of what he did.

I'm not exactly a minarchist. I know we have *way* too much government now and I know we could make things a lot better by getting rid of most of it. But I don't pretend to know just how much we can actually get rid of. It's entirely possible (though I don't think it's likely) that we get all the way to minarchy and decide we don't need the rest of government. But I'd prefer not to get bogged down in those theoretical issues because there's so much we just don't know.

And tactically, it's better to build a consensus on the direction we need to go and the fact that we need to go very far in that direction. That could make a broad consensus among Libertarians, Anarchists, Objectivsts, and Minarchists possible.

You don't run the society at the level of specificity. We don't have to change our societal structures to make a trivial rule and neither would an AnCap society. If people wanted the ability to create such rules, they'd create structures with the power to pass them. For example, in our society, we have homeowner's associations that can pass rules that benefit all the people who live in a particular area. Nothing prevents such organizations from existing in an AnCap society.

However, this gets back to the transition problem. It's hard to see how you can make these kinds of organizations when you don't have them already. Theoretically, 100% universal agreement of every landowner in a region is required. Perhaps you could achieve that by using ostracism and social pressure.

I think most AnCap advocates would tell you that they don't want laws that are that specific. They're happy with a general rule that you can't do anything that poses an unreasonable threat to your neighbors. They don't think we need a law to solve every minor problem. (And that's a particularly bad law because it allows some jerk to set up a one person school right next to a landmine factory and blackmail the factory owner.)

Until your first default.

If you made a backup before you created the additional address, the backup won't have it.

There's a difference between gambling and scamming. When gambling, you know what the odds are, and the risk is not that the house won't pay out. With scamming, you have no idea what the odds are, and the risk is that the house will not pay out as agreed.

The bettors certainly can lose. If you make bad loans, you won't have the money to pay the bettors back, and they lose. Right?

If you had enough money of your own to ensure you could pay the bettors back even if your loans fail, why wouldn't you just lend that money and keep all the profits?

Since the bettors can lose, they need some way to determine what the odds are of them losing. Otherwise, they can't tell if this is a good deal or a bad deal. So how do they tell?

The point was that your investors had to be able to realistically assess the risk of investing with you.

The point was that your investors have to know what will happen if they do take losses. For example, investors with Pirate took losses when Pirate failed to meet his own payout terms. Those investors now have no idea what the value of their investment is. Every Ponzi scheme will go through a long period in which people are told they didn't take losses and the investors are kept in the dark about the losses they are taking. There has to be a way for investors to know they have not in fact taken losses.

If your current total deposits exceed the fund's assets, then your investors have taken losses. If you're hiding that from them, that's a problem.

Are you saying that right now, the fund's total net worth exceeds deposits? If so, why don't your investors know by how much? Essentially, you are the only one who knows the actual value of the funds your investors supposedly own a portion of.

Anything sufficient to do these four things would be enough for me:

1) Determine that claimed profits are in fact profits from investments.

2) Realistically assess the risk to investors.

3) Assure investors that there's a mechanism in place so that if they do take losses, they'll be able to reasonably assure themselves that those losses were due to legitimate investment losses and not just him deciding to keep people's money.

4) Assure investors that there's a mechanism in place such that if there are reductions in the total worth of all investments, losses will be taken proportionately by all investors instead of processing full payouts to those who happen to withdraw first and leaving essentially nothing for those who don't withdraw at the right moment.

It's not a matter of whether it's a Ponzi or not really. There are lots of scams that aren't Ponzis. The idea is to show that it's a legitimate loan or investment. If there was something that was otherwise a legitimate investment but couldn't do at least two of these four things, rational people would not invest in it.

You cannot imagine how spot on you are!

People say my driver's license picture looks exactly like the Unibomber. It could be the dictionary's picture for "terrorist".

And about ten years ago, my daughters swam competitively. To raise money, their team operated a Bingo hall. Each parent had to work a few days in the Bingo hall, and the old ladies there used to call me "Jesus".

So I'd say you nailed me.

As for offence, only two things have ever offended me. One was the Penn Jillette and Paul Provenza movie, "The Aristocrats", and I can't remember what the other is. It's really hard to offend me.

Siberian girls are well known for their hotness, but they are also known for their sturdiness and for the remarkable rapidity with which the former turns into the latter.

I don't think anyone signed a contract, but Pirate made an offer and people accepted it by doing what the offer told them to do.

If I say, "I will gladly pay you Tuesday for a hamburger today", and you give me a hamburger today, then I have to pay you Tuesday. If I do it reluctantly, you have a case against me.

Update: Or, what Validimir said above me. But I think I said it funnier.

Thanks for the link. I think you're right.

This is what Pirate said that preceded Matthew's bet:

"Starting Monday I’ll begin systematically closing and withdrawing accounts as coins are transferred.  I don't expect the entire process to last longer than a week. The moment your account is closed you’ll receive your coins plus any interest accrued up to the hour it was sent."

So if he is to pay "as agreed" above, for anyone who doesn't agree to any other terms in place of those above, he must pay all coins plus interest earned up until the hour he makes payment. There is no mention there of any additional terms or conditions, so any such additional conditions would not be "as agreed" unless people choose to accept them.

Amy Schumer says they have the smallest vaginas in the game.