“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.
Wednesday, 2 August 2017
Quote of the Day: “We don’t have capitalism…”
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2 comments:
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.
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.
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