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State support of specific corporations extends beyond QE (bailouts). The entire money-creation apparatus favors large corporations due to cantillon effects. In
by jongjong 4y ago
State support of specific corporations extends beyond QE (bailouts). The entire money-creation apparatus favors large corporations due to cantillon effects. In high interest environment, corporations can collect interest on deposits at the Fed (newly created money). during low interest environment, they benefit from people taking out loans (also newly created money) to push up their stock prices.
- epups 4y agoThis does not mean the corporations are state owned. If all large corporations benefit from the "money-creation apparatus" as you say, they still have to compete and can fail. The US government did not dictate that Google, Meta, Amazon or Apple would overtake IBM.
- jongjong 4y agoCorporations may be on a somewhat level playing field with each other but they are given an unfair advantage relative to every other business (especially small business). Any help from the money printers can radically alter outcomes. If a large corporations is getting enough help to allow them to cut their profit margins by even 10%, that may be enough to put all their competitors out of business. Survival is often a matter of tiny differences.