To the Most Exalted Lords, Commissioners, High Priests, and Keepers of the Ever-Elastic Definition of Fraud – the Venerable Securities & Exchange Commission:
I write today with a humble plea that I fear has been overlooked by your otherwise flawless administration of financial justice.
I shall cut right to the proverbial chase. Would you humbly and kindly please legalize what has colloquially come to be known as “Ponzi schemes”?
These laudable and sophisticated instruments have gotten a very “bad rap” by the Elite class of unintelligent and myopic finance adjudicators of yesteryear. However, I believe the venerable Ponzi system simply needs a new marketing department. It works just fine! It has for decades. For as your own department has already demonstrated, through your actions, they become perfectly acceptable once the correct people perform them.
For years, I and other uneducated saps foolishly believed that paying earlier investors with money supplied by later investors was considered a species of deceit or outright fraud. I even labored under the quaint impression that the Securities and Exchange Commission took a dim view of such tawdry arrangements.
Imagine my delight to discover that this prohibition is not universal at all! Rather, it appears to operate in the light of day and is routinely sanctioned for use (and encouraged) by your very organization.
The revelation came while observing the astonishing career of financial magnate Michael Saylor, whose incredible genius has consisted largely of convincing investors that borrowing money to buy more Bitcoin in order to convince still more investors to buy securities backed by borrowed money to purchase still more Bitcoin is not merely finance, but civilization itself.
One must stop and applaud such raw, unadulterated elegance.
His latest financial creation, Stretch (STRC), appears positively revolutionary. Here at last is an investment vehicle openly discussing shareholder distributions while continuously raising fresh capital. Lesser men might become confused and ask whether there exists any philosophical distinction between such an arrangement and the investment structures your agency has spent ninety years prosecuting.
Thankfully, wiser men and financial geniuses all assure us there is. The difference, I gather, is simply typography. For if the prospectus is printed on sufficiently expensive paper and fawned over by countless CNBC hosts, the mechanics become innovation.
Yet should the same arrangement be executed by a fellow named Steve operating out of his basement in New Jersey, it immediately becomes twenty-five years in federal prison.
The transformation is truly miraculous.
Yet even Mr. Saylor’s accomplishments pale beside the financial ingenuity of our own federal government! Permit me to congratulate Congress on operating the largest and most respected Ponzi arrangement in human history without once suffering the inconvenience of a subpoena. This, if nothing else, should invariably prove without a doubt the wonder and staunch skeleton of this proven investment framework.
Every working generation faithfully contributes so that the previous generation may receive its promised benefits, all upon the understanding that an even larger generation shall someday arrive to finance them in turn. And whenever demographics become inconvenient, we simply borrow. Whenever borrowing becomes inconvenient, we simply promise that future taxpayers will display greater enthusiasm than present ones. Whenever that becomes inconvenient, we appoint a commission.
I fail to see the problem.
Indeed, if the Social Security program is routinely defended as perfectly legitimate whenever anyone dares compare it to a dreaded “Ponzi scheme,” then I can only conclude that the true offense was never the mechanics.
The offense was simply insufficient political influence and piss-poor marketing.
This profound discovery has liberated me. For I no longer wish to build services that add value. I no longer wish to invent products which improve society. I no longer wish to improve civilization through trite mechanics like labor or skill. I merely seek permission to become systemically important like the wealthy and politically connected do!
I therefore propose to you, wise keepers of our financial apparatus, a simple licensing regime. Please consider this for immediate enactment to help produce unimaginable wealth for our beloved country and for those who wish to improve upon it further. Any citizen wishing to operate what was formerly known as a “Ponzi scheme” should merely satisfy the following conditions:
- Raise no less than one billion dollars.
- Employ at least three former regulators.
- Replace the phrase “new investors pay old investors” with “capital formation supports shareholder yield.”
- Refer to every obligation as a “strategic allocation.”
- Mention Bitcoin no fewer than seventeen times.
- Add “AI” to the investor presentation regardless of relevance.
- Ensure that at least two cable news anchors describe the founder as “visionary.”
Upon satisfying these modest requirements, the applicant shall receive an official Certificate of Regulatory Enlightenment, certifying that arrangements formerly condemned as fraudulent have now ascended into the exalted realm of Financial Innovation.
Should any skeptic question the enterprise, the Commission need only issue its customary reassurance:
“This is fundamentally different.”
No explanation need follow.
The phrase has performed admirably for bubbles, leverage, sovereign debt, internet stocks, mortgage-backed securities, cryptocurrency, and every other episode in which arithmetic briefly surrendered to enthusiasm. It surely has many years of useful service remaining.
In closing, I ask only for equality before the law.
If these financial architectures become respectable when practiced by billionaires, investment banks, or the federal government itself, then justice demands that the same privilege be extended to ordinary Americans.
Surely equal protection under the law requires nothing less.
Your humble & obedient servant,
Sean M. Dempsey, ESQ.
A Citizen Too Small to Be Called Innovative or Impressive
