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A comment on Fed Prints Another $205B This Week, M2 Growing at Fastest Pace on Record. Parent comment

Re:Fed Prints Another $205B This Week, M2 Growing at Fastest... by godtoldmetodoit on Friday April 24, 2020 @01:09PM (#22970433)
Ahh the old "shareholders are the only thing that matters" argument.

Buybacks and dividends are not equivalent, buybacks are tax advantaged in ways that dividends are not.

We've allowed numerous companies to get to a size where they are "too big to fail". They know they are too big to fail, and they get to take advantage of this position. They get to go into near unlimited amounts of debt to finance buybacks to enrich shareholders and C levels, and when times are good this all works out. When the economy enters a downturn and they don't have cash on hand to weather the storm, they know the Fed will be there to bail them out.

Something is fundamentally broken here. You can reasonably argue whether it is with the buybacks, or the bailout, but this system is fucked.

For more in depth reporting on this, I highly recommend checking out Matt Taibbi. https://taibbi.substack.com/p/resetting-the-bomb

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Re:Fed Prints Another $205B This Week, M2 Growing at Fastest... by jonfw on Friday April 24, 2020 @02:53PM (#22971669)
Companies like Home Depot and IBM aren't usually considered 'too big to fail', so these aren't really great examples for the point you're trying to make.
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Re:Fed Prints Another $205B This Week, M2 Growing at Fastest... by WanderPanda on Friday April 24, 2020 @05:40PM (#22973205)
Its not that buybacks have a tax advantage, dividendes rather have a tax disadvantage
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Re:Fed Prints Another $205B This Week, M2 Growing at Fastest... by throw0101a on Saturday April 25, 2020 @10:01AM (#22978158)
> Buybacks and dividends are not equivalent, buybacks are tax advantaged in ways that dividends are not.

[citation needed; location specific]

Here in Canada both capital gains and dividends of Canadian companies have special tax treatments.

Also remember: in both cases the money leaving the company are profits, which are (should be?) taxed at the corporate tax rate. So the government should be/is getting a cut already. The recipient of the money (either buyback or dividend) is then getting taxed again(?) potentially.

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