Stock of the Day

Out of context: Reply #306

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  • BarryEvans4

    https://mattstoller.substack.com…

    "Eighteen months ago, when interest rates started to turn negative, I noted that this anti-production bias is causing a very serious problem with how money flows into the real economy.

    Very low or negative interest rates mean that investors can’t find any place to place their savings. Investors perceive there are no more factories to build, no distribution centers to create, no new energy systems to research, no more products to create. You can only stuff money under a mattress, and the price of mattresses is going up. Our financial system, in other words, is acting like we have no more social problems to profitably solve.

    What is really happening is not that we’ve run out of problems to solve, but that the economy has become a giant “kill zone,” which is a term venture capitalists use to describe areas they can’t invest for fear that a monopolist will crush their company. Extreme market power is evident in tech markets, but it’s systemic in smaller markets as well, like horse shows, puzzles, cheerleading, portable toilets, mixed martial arts, mail sorting software, and a whole lot more.

    With an economy of monopolies, there are now large profits with nowhere to go because investment in new production doesn’t make sense if you have market power. Workers have little bargaining power, so the extra money doesn’t go to them. Taxes on capital are low, so the money isn’t heading back to the government. Moreover, a lot of small businesses have been shut down because of the pandemic, so people can’t put their savings into new business even if they wanted to. Monopolies and a corrupted financial system have broken the ability to put money into useful enterprises. So where is it going?

    Speculation."

    BarryEvans 4Permalink
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    • Probably should have stuck that in the capitalism thread, but an interesting take on what is fuelling the current stock boomBarryEvans
    • I'm upvoting this content just because it's not a stupid youtube videonb
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