01-18-2018, 02:44 PM
(01-18-2018, 10:51 AM)Kinser79 Wrote:(01-16-2018, 04:47 PM)David Horn Wrote: The stock market has almost nothing to do with capital formation,
Mr. Horn do you not realize that you have essentially just proved to me that you are economically illiterate? Corporations sell stock for the express purpose of raising capital to use it for whatever they want to use that capital for. Why investors buy stock from this or that corporation is pretty much irrelevant.
While the vast majority of businesses in the US are not corporations listed on the NYSE, to say that the stock market is not a means for those corporations that are to raise capital. Indeed that is the raison d'etre of stock markets in general.
Further, considering that a large proportion of businesses in the US are not corporations at all, inflation limits the ability of those businesses to acquire capital. Why is that? Because there is great difficulty to to acquire capital faster than the corrosion of value of the currency through inflation
Ignoring the issuance of new capital, stock splits and buy-backs, mergers, and various forms of restructuring (debt is transformed into ownership, the transfer of a non-initial share of stock from one person to another does not itself create capital. Thus if I buy a share of stock in Comerica, Ford Motor Company, Proctor&Gamble, Wal*Mart, Xerox, or Coca-Cola I am buying a representation of the value of the company from a previous owner. My purchase of stock on the market does not infuse cash into the company whose stock I buy.
Incorporated, exchange-traded businesses create capital through profitable operations and wise investments. Basically one buys a stock as a stream of dividends unless one is a day-trading gambler.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.