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My gut says that eventually prices will reflect a major player like this. Eventually it will get harder and harder for a government to borrow money to pump into
by milesvp 9y ago
My gut says that eventually prices will reflect a major player like this. Eventually it will get harder and harder for a government to borrow money to pump into other investment systems, or the other investments will get more and more expensive giving a lower yield. Couple this with the fact that the government still needs to deficit spend occasionally (or at least politically it's nearly impossible not to run a deficit) , means that they can't just buy and hold, but will inevitably have to cash out some of their holdings.
- toomuchtodo 9y agoIf done at the central bank level, you can simply print the money necessary to acquire equity investments. Japan’s central bank does this, and is slowly consuming the Nikkei. To answer the original post above, there’s nothing stopping the federal reserve from delivering communism/socialism this way except political will and leanings. The federal reserve mandates are to keep the country at full employment and keep inflation low. What better way to do so besides “seizing the means of production” through printing fiat. https://www.bloomberg.com/news/articles/2017-07-18/boj-s-etf-buying-is-said-to-raise-concern-among-some-officials https://www.bloomberg.com/news/articles/2017-07-18/boj-s-etf...