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How is this even rational that companies "invest" billions of dollars that they dont even have? capitalism ad2025 is a joke
by iammjm 11mo ago
How is this even rational that companies "invest" billions of dollars that they dont even have? capitalism ad2025 is a joke
- marcosdumay 11mo ago> billions of dollars that they dont even have Companies don't ever "have" things, they are themselves things that people have. There isn't a fundamental difference between taking a loan smaller than their total capitalization or spend some money they have liquid at the bank. It's both taking money from the shareholders and spending on something. That said, yes that investment is stupid and deserves quotes around the word. But making risky investments when the company is operating in the red isn't stupid at all... it's just that this one isn't risky, it's certainly bad.
- Am4TIfIsER0ppos 11mo agoWait until you discover that the bank doesn't have those dollars in your account.
- astrange 11mo agoIt mostly does. Treasuries are a kind of dollar.
- Am4TIfIsER0ppos 11mo agoThey could cash out everyone's account from the Scrooge McDuck pile of gold in the vault?
- astrange 11mo agoUp to $250k per account yes. The bank would fail but you'd get it over the weekend.
- dingaling 11mo agoThe FDIC currently holds a reserve of 1.28% of deposits. It can handle a single bank run, but not a widespread one.
- astrange 11mo agoThey don't usually touch the reserve. They tell a bigger bank to buy them over the weekend and back it up. Afterwards they can use that, charge the other member banks or reopen: https://www.federalreserve.gov/financial-stability/bank-term-funding-program.htm https://www.federalreserve.gov/financial-stability/bank-term...
- HWR_14 11mo agoIf you can borrow money at X% and make (X+1)% on that money, you do that and invest it. As an individual you can do that by buying stocks on margin.
- astrange 11mo agoYou can also do it by buying risky stocks and pretending you're buying alpha!