In an interview several years ago Mark Cuban called the stock market a ponzi scheme. At first I wasnt comfortable with that that label but it does fit because in order for prices in the stock market to continually rise you need fresh buyers. What I realized about Mark is that he has a keen insight into interdependent relationships. What may seem complex, as in, the stock market, can be reduced to a scheme, although a pyramid may be a better description than ponzi. And if you have studied the major players in the game who made fortunes a hundred years ago or earlier from trading in stocks, it is evident that those early proficient players did not consider the stock market a long-term game or part of ones long-term savings. It merely was a means to execute strategy.
Furthermore, the Madoff ponzi scheme is a form of the market itself it is an efficient way to access capital (legal and moral considerations aside), and the spectacular success of Madoff is that he knows exactly why his approach builds success, if any of his investments substantially gain in value his fund can pay off his investors without using money from other investors. If you are in the investment business you know that this occurs, however in Madoffs case the sheer size of the fund and losses is amazing. The most important consideration for those with wealth is to have people watching the people who are watching your money.