On June 12 local time, Nobel Prize-winning economist Paul Krugman published an article characterizing the world's wealthiest individual, Elon Musk, as a Ponzi scheme.

Here is a compilation of the original text:

I embarked on a brief journey yesterday. First, I rode a local hyperloop train through a tunnel excavated by The Boring Company. Afterwards, I summoned a fully autonomous Tesla robotaxi via a neural interface. During the trip, I also read the latest news from the Martian colony.

Of course, none of that actually happened, because those products do not exist.

There are no operational hyperloop systems anywhere. The Boring Company has not constructed any commercial tunnels. Tesla Motors has deployed only a handful of autonomous, not fully self-driving, taxis in Austin, and nowhere else. (Waymo, owned by Google, operates driverless taxis in several major hubs.) Neuralink, which claims to pioneer brain-computer implants, has tested its product on only a few patients with no further progress. And, naturally, there is no Martian colony—no human has ever flown to Mars, nor is such a mission foreseeable in the near future.

Yet, over the past decade, Elon Musk has repeatedly promised that all these services would be available by 2025 at the latest, if not sooner.

It is undeniable that Musk has achieved some tangible successes. Tesla Motors seized an early lead in electric vehicles, and Starlink is not only a crucial service but also a profitable business.

However, these accomplishments are not what make Musk the world's richest person. In reality, his fortune has long been built on a self-fulfilling belief—investors, convinced of Musk's "genius persona," pour money into the stocks of the companies he controls. The rising market valuations of these companies, in turn, reinforce his reputation as a genius.

There is a specific term for this type of enterprise: it appears successful because it can continuously attract new investors, and it can attract new investors because it appears successful. Such enterprises are called Ponzi schemes. Elon Musk is, in essence, a human Ponzi scheme.

Furthermore, the ongoing initial public offering (IPO) for SpaceX makes it clearer than ever that Musk's greatest skill lies not in developing future technology, but in financial sleight of hand and leveraging insider influence for profit—particularly his influence with the Trump administration.

To understand this, consider Musk's 2022 acquisition of Twitter, later renamed X. To finance the deal, investment banks lent Musk $13 billion, planning to quickly offload this debt to other investors. However, Musk subsequently transformed X into a platform rife with extreme right-wing rhetoric and permissive of Nazi ideology, destroying its business model and driving advertisers away. By the summer of 2024, X's valuation was less than half its purchase price. Selling the debt at that point would have meant a 40% loss for the banks, forcing them to hold onto the Twitter debt long-term. This directly led to a headline in The Wall Street Journal in August 2024: "Elon Musk's Twitter Buyout Becomes Banking's Worst M&A Deal Since the Financial Crisis."

But two subsequent events rescued these banks and preserved Musk's future creditworthiness: the election of Donald Trump as U.S. President in 2024 and the rise of the artificial intelligence wave. After Trump's election, advertisers began returning to X, citing the need to curry favor with both Musk and Trump. In March 2025, Musk merged his newly formed AI company, xAI, with X, riding the soaring wave of AI hype to further inflate X's valuation and beautify his personal balance sheet.

Unfortunately for Musk, however, various evaluations indicate that the Grok large language model developed by xAI performs far worse than AI models from Anthropic and OpenAI and is widely considered unsafe and unreliable. The model has, at times, generated racist and antisemitic statements, even referring to itself as "Mechanical Hitler." Trump administration officials pressured government agencies, including the Pentagon, to use Grok, but with little success.

Thus, Musk first rescued X by merging it into xAI, and is now attempting to rescue xAI by merging it into SpaceX—a company whose Starlink business is indeed a successful venture.

Today, SpaceX went public. Its IPO began trading on the Nasdaq at a share price implying a company valuation of $1.77 trillion. This is a company that reported revenue of just $18.7 billion last year and is operating at a loss.

What justifies such an astronomical valuation? Part of the core logic of this IPO relies on the assumption that retail investors will follow the trend and buy—not because they have made a rational assessment of SpaceX's business value, but because they believe they are buying into "the genius aura of Elon Musk."

However, this base of loyal followers alone is unlikely to sustain this financial illusion. Therefore, Musk's allies on Wall Street have stepped in to manipulate the rules of the game. Several major stock indices, particularly the Nasdaq-100 and the FTSE Russell indices, have recently changed their rules to pave the way for SpaceX's rapid inclusion.

It is important to understand that a company's inclusion in a major stock index carries significant financial benefits. A large portion of the market's stocks are held by "index funds"—mutual funds whose portfolios precisely replicate the components of major market indices. Therefore, once a stock is added to a major index, index funds are compelled to buy it, creating immediate demand.

Traditionally, major indices wait at least a year after a company's IPO before considering it for inclusion, allowing the stock price time to mature. The decision to make an exception and change the rules for SpaceX is clear proof that Musk has once again demonstrated his ability to co-opt and corrupt key institutions. (It is worth noting that the S&P 500 index resisted this pressure, insisting on waiting a year before deciding on SpaceX's inclusion.)

This leads to my central argument: Elon Musk's vast human Ponzi scheme will eventually collapse. Traditional Ponzi schemes only harm willing investors, but this time, a significant portion of the capital propping up Musk's scheme will come from ordinary Americans—who are, in effect, being forced to participate. Currently, approximately 52% of mutual fund assets are invested in index funds or index-linked funds, and over 50% of U.S. households hold mutual funds. The collusion between Musk and Wall Street, coupled with the widespread perception that the Trump administration is backing him, will result in the vast majority of ordinary investors being involuntarily drawn in as fuel for Musk's capital empire.