by CL ➕follow (1) 💰tip ignore
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Cheap credit is parasitical.
In other words, if you are rich, you should have to take your assets and make bets on buying companies, goods, or capital improvements.
However, it doesn't work that way.
If you are rich, you have earned the privilege of borrowing super cheap money to grow your portfolio.
That is wrong on a number of different levels.
I've argued for some time that one of our problems as a nation has been cheap money for too long.
There is another recession coming, bad one. Why? We're getting a few Fed chairman who will be no doubt forced to begin taking away the punch bowl. There is simply no way around it.
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I've seen a lot of folks here denounce the financial sector as parasitical, but as I played the scenario out in my head I began to think I might not fully understand why. I can see why if the income and wealth is poorly distributed (and the financial sector already had too much of our capital) that giving them more would cause even more of an imbalance and hurt consumption by the lion's share of the population. In that example, they are secondary to the pre-existing inequality though.
But in normal capitalism how does it hurt, if the system funds purchases, takes a cut for the investment, then spends the investment on anything? Is it that their share of the profits is just too large? Or is it always a negative?
Thanks