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1. When the money supply is increasing at a rate faster than stuff, the best use of capital is to hoard it. Can you show me examples of major companies issuing

1. When the money supply is increasing at a rate faster than stuff, the best use of capital is to hoard it. Can you show me examples of major companies issuing stock right now? Looks to me like they are all buying back their stock, which has the opposite effect. 2. Buying houses is an investment and is specifically carved out in the CPI. Consumption is Owner's Equivalent Rent, buying is not.

tylerhou 6y ago
https://www.cnbc.com/2020/12/08/tesla-to-raise-up-to-5-billion-in-share-offering.html https://www.cnbc.com/2020/12/08/tesla-to-raise-up-to-5-billi... https://www.ft.com/content/a59c2a9d-5e0b-4cbc-b69e-a138de76a776 https://www.ft.com/content/a59c2a9d-5e0b-4cbc-b69e-a138de76a... https://www.bloomberg.com/news/articles/2020-12-21/u-s-stock-sales-raise-435-billion-amid-2020-s-ipo-euphoria https://www.bloomberg.com/news/articles/2020-12-21/u-s-stock... Stock and bond issuances are at all time highs. Housing is an investment in the CPI because most people don’t buy houses as consumption. The CPI aims to create a basket of consumption for normal people. Rich people do consume houses, and their consumption leads to money circulating. Should rich people be rich enough to buy houses willy-nilly? That’s a different question. Maybe they shouldn’t, to the current degree.
- ItsMonkk 6y ago
  > highest-profile recent example of borrowing for buybacks: > Apple (ticker: AAPL). The tech giant sold $14 billion in bonds this month, and said it would use at least part of the proceeds on buybacks and dividends.[0] Kinda problematic when one large company doing buybacks dominates over thousands doing issuing reversing your entire narrative. Taking out bonds to give to shareholders is not something that helps main street. [0]:https://www.barrons.com/articles/debt-fueled-stock-buybacks-are-coming-back-that-could-hurt-tech-companies-credit-51612895429 https://www.barrons.com/articles/debt-fueled-stock-buybacks-...
  - willcipriano 6y ago
    I post this here for posterity: Within ten years a film will come out about the next economic disaster and everyone will be saying "how could we be so stupid to allow firms to buy their own stock with debt?" much like the housing crisis.
    - wyre 6y ago
      I don’t think the average person really knows how stocks work and isn’t even aware firms are able to buyback stock with debt.
      - willcipriano 6y ago
        How many knew about CDOs before The Big Short?
        MrMan 6y ago
        Or how to run a baseball team before Moneyball
    - chii 6y ago
      > buy their own stock with debt? why not? What's wrong with altering a company's capital structure to be more efficient? Stocks have a cost (aka, cost of equity), just like debt. Sometimes, cost of equity is higher than cost of debt (aka, the interest rate). Sometimes, the cost of debt is higher than cost of equity. This is determined by the general market conditions and economic environment. A company may find itself in a situation where the cost of equity is very high, and cost of debt is very low. In this case, it makes a lot of sense for the company to borrow to reduce the amount of outstanding equity on the market. There is an equalizing point, where the total cost of capital is lowest, and that is where the company's money source is most efficient. There is absolutely nothing wrong with company buying back stocks, if this is the case. The only problem, really, is that buybacks gives capital gains for stockholders, and this is taxed lower than normal income. This is a question of taxation policy, not stock buybacks. Is it fair that capital gains are taxed less than earned income?

tylerhou 6y ago

https://www.cnbc.com/2020/12/08/tesla-to-raise-up-to-5-billion-in-share-offering.html https://www.cnbc.com/2020/12/08/tesla-to-raise-up-to-5-billi... https://www.ft.com/content/a59c2a9d-5e0b-4cbc-b69e-a138de76a776 https://www.ft.com/content/a59c2a9d-5e0b-4cbc-b69e-a138de76a... https://www.bloomberg.com/news/articles/2020-12-21/u-s-stock-sales-raise-435-billion-amid-2020-s-ipo-euphoria https://www.bloomberg.com/news/articles/2020-12-21/u-s-stock... Stock and bond issuances are at all time highs. Housing is an investment in the CPI because most people don’t buy houses as consumption. The CPI aims to create a basket of consumption for normal people. Rich people do consume houses, and their consumption leads to money circulating. Should rich people be rich enough to buy houses willy-nilly? That’s a different question. Maybe they shouldn’t, to the current degree.

ItsMonkk 6y ago
> highest-profile recent example of borrowing for buybacks: > Apple (ticker: AAPL). The tech giant sold $14 billion in bonds this month, and said it would use at least part of the proceeds on buybacks and dividends.[0] Kinda problematic when one large company doing buybacks dominates over thousands doing issuing reversing your entire narrative. Taking out bonds to give to shareholders is not something that helps main street. [0]:https://www.barrons.com/articles/debt-fueled-stock-buybacks-are-coming-back-that-could-hurt-tech-companies-credit-51612895429 https://www.barrons.com/articles/debt-fueled-stock-buybacks-...
- willcipriano 6y ago
  I post this here for posterity: Within ten years a film will come out about the next economic disaster and everyone will be saying "how could we be so stupid to allow firms to buy their own stock with debt?" much like the housing crisis.
  - wyre 6y ago
    I don’t think the average person really knows how stocks work and isn’t even aware firms are able to buyback stock with debt.
    - willcipriano 6y ago
      How many knew about CDOs before The Big Short?
      - MrMan 6y ago
        Or how to run a baseball team before Moneyball
  - chii 6y ago
    > buy their own stock with debt? why not? What's wrong with altering a company's capital structure to be more efficient? Stocks have a cost (aka, cost of equity), just like debt. Sometimes, cost of equity is higher than cost of debt (aka, the interest rate). Sometimes, the cost of debt is higher than cost of equity. This is determined by the general market conditions and economic environment. A company may find itself in a situation where the cost of equity is very high, and cost of debt is very low. In this case, it makes a lot of sense for the company to borrow to reduce the amount of outstanding equity on the market. There is an equalizing point, where the total cost of capital is lowest, and that is where the company's money source is most efficient. There is absolutely nothing wrong with company buying back stocks, if this is the case. The only problem, really, is that buybacks gives capital gains for stockholders, and this is taxed lower than normal income. This is a question of taxation policy, not stock buybacks. Is it fair that capital gains are taxed less than earned income?