Samuelson's paper was seminal but not wholly original.
A similar model was described in 1947 by Maurice Allais, then working in a bureau of mining statistics in Paris, but his contribution had the “misfortune to be written in French”, as one scholar has noted.
The neverendingness of these models plays havoc with a lot of economic common sense.
Economists know in their bones that budget constraints eventually bind and that accounts must be settled at the end of the day.
But what if the end never quite arrives?
Such parables may seem too contrived to be illuminating.
Surely the islanders benefit from a Ponzi scheme only because the story arbitrarily denies them any way to save for their future.
If the young could instead acquire a durable asset, they could take care of themselves in their old age by selling it for the things they need.
Instead of eating a cacao fruit, islanders could plant it to grow a new tree, which they could later rent or sell to young climbers when they retire.
In most cases, this kind of saving and investing does indeed serve people far better.
Capital accumulation enlarges the economy's productive capacity, thereby creating wealth, unlike Ponzi schemes, which merely spread it around.
Saving and investing both store value and add to it, turning one cacao fruit into a whole tree.
Retirees can therefore expect to get more out of their investment than they put in.
In some unusual cases, however, other factors may weigh in the Ponzi scheme's favour.
First, saving and investing may run into sharply diminishing returns.
If a society is eager to transfer resources into the future, it will accumulate a large stock of capital, which may depress the return on further investment.
Think of an orchard too densely packed with trees, each getting in the others' light and denuding their soil.