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Federal Reserve: How Ponzi Schemes Build Trust and Why They Unravel (Explained)
This episode delves into a Federal Reserve research paper that develops a new model of Ponzi schemes, focusing on how these frauds operate under asymmetric information. We explain in plain English how scheme operators build trust and reputation over time, the conditions under which these frauds can persist, and what interventions are most effective in preventing them. Want to discuss this or other economic research? Reach out to feedback@econpod.org. Find the full paper at https://www.chicagofed.org/publications/working-papers/2025/2025-05. This episode explains a real academic paper in plain…
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