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Creditworthiness should not be for sale — LessWrong

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1. Some trader or executive gets in a position where they can use a bunch of other people's resources (either via borrowing them, or being given custody over them) 2. They spend some of those resources to increase their perceived creditworthiness/trustworthiness 3. They use this to gain control over more resources 4. They use those additional resources to buy more creditworthiness, which they then use to get more resources, and so on 5. Eventually some market shock or similar event causes people to re-evaluate the creditworthiness of the trader or executive, at which point the whole thing collapses and their debts get called in (often in the literal form of a margin call, sometimes in the form of a criminal conviction)[1] The exact mechanism by which each one of those steps is achieved is different from case to case, but the overall result is the same. Everyone is sad, and society updates how we evaluate the trustworthiness of others. Going through a few concrete examples: FTX Enron Th

x Don't let people buy credit with borrowed funds — LessWrong World Optimization Frontpage 2025 Top Fifty: 14 % 114 Don't let people buy credit with borrowed funds by habryka 14th Nov 2025 12 min read 43 114 I. Most large-scale fraud follows basically the same pattern: 1. Some trader or executive gets in a position where they can use a bunch of other people's resources (either via borrowing them, or being given custody over them) 2. They spend some of those resources to increase their perceived creditworthiness 3. They use this to gain control over more resources 4. They use those additional r

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