(1/6) The policies of the @federalreserve over the last decade have suppressed financial distress, which has curtailed the forces of creative destruction, the system of checks and balances required throughout the business cycle, and for a well-functioning economy.
(2/6) The decade pre-COVID had seen the opposite of this. The monetary policies adopted by the fed prevented creative destruction to naturally take place as easy financial conditions allowed for less efficient companies to survive.
(3/6) The total number of listed companies began declining; fewer companies went public, and increased M&A activity decreased the total count of companies that were already public. Additionally, through share buybacks, companies continued to ‘retire’ shares at a record pace.
(4/6) Overall, we have created a much more concentrated market, which paradoxically reduces competition and, hence, the real benefits of a capitalist system.
(5/6) A larger pool of wealth, created over the last few decades via the capitalist system, is now held by fewer, larger companies with fewer shares outstanding, creating a chasm between the holders of that wealth, and everyone else.
(6/6) An unintended consequence of the suppression of financial distress.
Read the full article here:
thelykeion.com/macro-print-ju…
Read the full article here:
thelykeion.com/macro-print-ju…
