workers stopped blindly pouring money into index funds in their 401ks? I’m not saying the market is a hoax or a Ponzi scheme in its entirety, but in some ways it functions a lot like one. I am referring more to the phenomenon of millions of people who pour large portions of their income into index funds in their 401ks as they are sold on the idea that stock valuations will continue to go up as they have for their parents and grandparents before them (without any understanding of market fundamentals/what they are buying/comparative analysis among investment choices). They are sold on this idea largely by the people who will theoretically be cashing out from their contributions. This leads to increased demand, which drives multiples up to the point that the valuations don’t really make sense if you look at the profits you are buying. Theoretically, if people stop buying in, demand craters, valuations crash, and the last people in aren’t able to cash in on what they were promised. To the extent that people are blindly pouring money into the markets, frothing everything up, driving up valuations, the market behaves somewhat like a Ponzi scheme as it only allows people to cash out as others cash in.

I do realize that this in an imperfect analogy as a true Ponzi scheme is based on some fraudulent enterprise where the first out cash in purely on others contributions, whereas real returns are generated by well run companies to boost and substantiate valuations. However, I maintain that there is a Ponzi-like component in the returns generated from stock investing.