{"id":7183,"date":"2015-04-09T07:00:39","date_gmt":"2015-04-09T12:00:39","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7183"},"modified":"2015-04-09T07:00:39","modified_gmt":"2015-04-09T12:00:39","slug":"eating-the-seed-corn-the-feds-horrid-corruption-of-corporate-finance","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7183","title":{"rendered":"Eating The Seed Corn\u2014\u2013The Fed\u2019s Horrid Corruption Of Corporate Finance"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/davidstockmanscontracorner.com\/eating-the-seed-corn-the-feds-horrid-corruption-of-corporate-finance\/\" target=\"_blank\">Eating The Seed Corn\u2014\u2013The Fed\u2019s Horrid Corruption Of Corporate Finance<\/a><\/h3>\n<p>Central bank financial repression results in the systematic and severe mispricing of financial assets. And that has\u00a0sweeping consequences far\u00a0beyond the munificent windfalls it bestows on the thin slice of mankind that frequents the casinos of Wall Street, London, Tokyo and Shanghai.<\/p>\n<p>The fact is, the prices of money, debt, equity, traded commodities and all their derivatives comprise a vast and instantaneous signaling system that\u00a0cascades through every nook and cranny of\u00a0the real economy. When these signals are systematically falsified by a few dozen\u00a0central bankers they cause hundreds of millions ordinary businessmen, workers, investors and entrepreneurs to alter their economic\u00a0calculus.<\/p>\n<p>And not in a good way. False signals lead to mistakes, excesses, losses and waste. They ultimately reduce economic efficiency and productivity and lower the rate of economic growth and real wealth gains.<\/p>\n<p>Since the Greenspan age of financial repression incepted in the late 1980s, for example, the returns to savings have been obliterated while the rewards for speculation have soared. That\u2019s important because only savings from current production and\u00a0income\u00a0generate additional primary capital that can\u00a0foster future wealth.<em><strong>\u00a0By contrast, leveraged speculation\u00a0merely causes existing\u00a0financial assets to be re-priced and a temporary redistribution of paper wealth from the cautious to the exuberant.<\/strong><\/em><\/p>\n<p><span class=\"Apple-style-span\">In an honest free market, in fact,\u00a0there is no excess return to leveraged speculation at all.\u00a0Natural market makers arbitrage out the spread between the costs of carry and the returns to carried assets such as long-dated futures contracts, term debt and\u00a0various and sundry forms of equity and other\u00a0risk assets.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Eating The Seed Corn\u2014\u2013The Fed\u2019s Horrid Corruption Of Corporate Finance Central bank financial repression results in the systematic and severe mispricing of financial assets. And that has\u00a0sweeping consequences far\u00a0beyond the munificent windfalls it bestows on the thin slice of mankind that frequents the casinos of Wall Street, London, Tokyo and Shanghai. The fact is, the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[952,124,2120,195,303,305,315,2128,4699],"class_list":["post-7183","post","type-post","status-publish","format-standard","hentry","category-economics","tag-alan-greenspan","tag-central-banks","tag-david-stockman","tag-debt","tag-fed","tag-federal-reserve","tag-financial-repression","tag-free-market","tag-seed-corn"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7183","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7183"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7183\/revisions"}],"predecessor-version":[{"id":7184,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7183\/revisions\/7184"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7183"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7183"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}