Friday, January 29, 2021

This is Very Sad: Top Names Fail to Understand the Basic Economics of the Stock Market

Two of the best commentators on the current scene, Tucker Carlson and Glenn Greenwald, apparently have no basic understanding of the importance of the stock market. 

Greenwald says in the clip below that Wall Street produces nothing, "They just exchange money." Caslon agrees. 

 And this is to say nothing of the sports guy at the start of the segment who wants to "put people in jail."

 

Remember, Murray Rothbard once asked the great economist Ludwig von Mises at what point on the spectrum of statism can a country be designated as "socialist." 

Mises said, "A stock market is crucial to the existence of capitalism and private property. For it means that there is a functioning market in the exchange of private titles to the means of production. There can be no genuine private ownership of capital without a stock market: there can be no true socialism if such a market is allowed to exist."

For the record.

The stock market is a powerful method by which capital is raised and allocated. It is a means by which successful businessmen can sell a part of their business and partly"cash-out" on their success.

It is a method by which the average man can take part in the ownership of some of the great American companies and up and comers.

Carlson and Greenwald apparently don't understand any of this.

-RW

14 comments:

  1. You're absolutely right, Bob. To be fair to the less economically literates: As you have rightfully pointed out, the crazy ZIRP world in which we live has not only created a gambling-like atmosphere in the stock market, it forces people who have no understanding of markets into buy/sell frenzies in an effort to chase returns.

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  2. While it's definitely dangerous that they have no idea what the purpose of a stock market is, is there any way that a populist uprising could ever do to successfully challenge wall street? I can't think of much outside of abolishing the Fed and restoring sound money.

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  3. When I watched this my thoughts were less charitable. I could see Greenwald not understanding, I thought Tucker was spouting propaganda.

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  4. The man crushes are over with these statists.

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  5. Greenwald does make reference to the utility of the stock exchanges as a secondary market to buy and sell securities in his more thorough video.

    https://www.youtube.com/watch?v=o3ZLFDQ36tI

    (He does get some of the technical points of short selling wrong, however.) Overall, his take is excellent, and I don't get the impression that he's totally against market exchanges, or even short selling.

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    1. Oh please, he has no idea what he is talking about. He even thinks the Redditors have made huge profits. There is no way that 90% of these people will be able to get out of their positions without huge losses.

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    2. He is gloating over the Redditors "victory." The Redditors will lose billions they just do not know it yet. Greenwald has a complete failure to understand Wall Street and what occurred.

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  6. No surprise. Being a statist, whether it's in support of AOC, Trump, or Reagan, requires economic ignorance.

    David B.

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  7. RW is correct. But I agree with The Contractor, neither Carlson or Greenwald have ever shown any understanding of economics. Of course now we will be subject to the howling for more coercive regulation when the exact opposite would be most beneficial for all but the thieves. Hopefully, when the dust settles we will still have what von Mises called the loopholes thru which capitalists breath.

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  8. But why did they shut off the chat features?

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  9. They're right. Losertarians are wrong.

    Fuck Wall Street.

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  10. In addition, the existence of a liquid secondary market in an asset lowers the risk of investing in an asset, as it means that if you need liquidity, then it is reasonably available. In this way, the stock market lowers the cost of capital for companies.

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  11. So what is the libertardian response about how hedge funds bet on the up or down of the stock and make billions by producing zero value? Is that a 'functioning market'?

    I'm sure a good number of the Reddit instigators on the GME know they are going to lose money. The goal is to destroy this hedge fund and rightfully so. Funny that most of them always have some of 'god's chosen people' at the helm, but I'm sure that's just a statistical fluke that can't be mentioned on this site.

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    1. Providing liquidity in a market (every trade has another party taking the opposite view) and/or making trades that reveal information to others about companies is not "producing zero value." And, even if it were, why should people not be allowed to risk their own money in any way that they see fit?

      The libertarian beef with hedge funds would be the same as the beef with any cronyists: If you want to risk your own capital, then that's fine, but don't ask the state to use coercion to protect your wealth from other "attacking it," or to get bailed out by others.

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