Say that a friend has started a new farm as a business and he's seeking investment. That's really not a good example of what we're talking about here. A singl

Say that a friend has started a new farm as a business and he's seeking investment. That's really not a good example of what we're talking about here. A single family farm is not a profitable business at all. There was an HN story about it just a couple of days ago. https://news.ycombinator.com/item?id=10823747 https://news.ycombinator.com/item?id=10823747 He'd like a cash investment in order to buy a tractor, harvester, and combine for the farm, which he can't afford himself. So I make the investment and the farm buys the equipment, which enables the farm to grow substantially more crops. No you don't. He might get a bank loan, in which case he is actually paying a fee in order to borrow that money. Now, if you were talking about the profitability of people paying you to borrow money, now you're in the right ballpark. I hear it's quite a profitable business. Look I'm not talking about hypothetical small business hand wavy stuff, I'm talking about the trillions of dollars floating around at the top end. Most of which is currently flowing into real estate, powering various bubbles around the world. I'll give you an example: from what I understand, Larry Ellison doesn't actually sell his stock in order to buy islands. He uses it as collateral to secure a loan. Those loans (something like 10 billion dollars worth at this point) can be spent/invested/leveraged, but it's not directly taxable because it's a loan. That's the kind of thing that you can do when you have a few billion. You don't even have to spend your own money. The net increase in the value of his real estate holdings is more than enough to pay the interest. Now, try playing that game if you have zero billions. http://www.bloomberg.com/news/articles/2014-09-25/larry-ellison-boosts-oracle-credit-line-to-9-9-billion http://www.bloomberg.com/news/articles/2014-09-25/larry-elli... No, they invest it in companies which use the cash to create wealth. Apple isn't a good example either. Companies do get cash from IPO's. After that, having a valuable stock is certainly nice. Apple doesn't fund operations by selling their stock. If the stock doubles, Apple doesn't get that money. Indirectly, of course Apple does issue stock as bonuses to employees, and buys back stock to return cash to investors. If Apple was privately held they'd make just as much money. They don't need the stock at all, it's just a side benefit that they can take advantage of when they make compensation packages.