Wednesday, 2 August 2017

Quote of the Day: “We don’t have capitalism…”


“I see much praise of Amazon as a feature of capitalism. But we don't have capitalism. We have central planning of credit managed by a central bank.
    “The Federal Reserve [the US central bank] has caused falling interest rates and rising asset prices, including especially rising Amazon stock prices. Amazon has financed itself in two incredible Fed-fueled bubbles. While it is somewhat open for debate, I don't believe that the company would have been able to do this in a free market. Certainly, to the extent that Amazon and its customers are consuming investor capital, that would not occur in a free market.
    “For much of its history, it made no money. Now it makes a scant five bucks a share. Which share is priced well over a grand.
    “‘The Fed’ has made stock market speculators heedless of the consumption of their capital. Which has made managers cavalier about consuming it.”

~ Keith Weiner on how government’s central banks feed capital consumption

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2 comments:

  1. Uber is an even better example of this. Despite being held up as he quintessential capitalist disruption of a regulated market, they have lost over $5 Billion in the last 4 years. They have never been revenue positive, and have no plans to make a profit in any forecast period.

    Without billions of dollars of free (or next to free) capital, companies like this would never be able to exist.

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  2. That we don't have pure capitalism does not mean Amazon is not primarily a product of capitalism. Credit creation may conceivably lead to Amazon being over over-valued, but a company that was value-less would have long since disappeared in a semi-capitalist economy. Any distortions that government may create are marginal in the overall context.

    ReplyDelete

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