Re:The public has a right to know how companies that pay no ...
by sokoloff on Tuesday November 03, 2020 @08:27AM
(#24979410)
Inflation is a tax on capital held in monetary form. It is not a tax on capital held as the earning power of an ongoing business. If I hold $1M of cash, I care about inflation eroding that over decades. If I hold $1M worth of DCF of Coca-Cola's future profit streams, inflation does not concern me for that portion of my capital.
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Re:The public has a right to know how companies that pay no ...
by pa7x1 on Tuesday November 03, 2020 @08:40AM
(#24979526)
Correct, thanks for bringing to attention that distinction.
My point is that the idle capital held in monetary form does nothing, so I want to disincentivize that to some extent. While I have nothing against that capital being available to an enterprise, they inject it back to the economy through their CapEx, R&D, income for employees, etc...
Potentially a company may also sit in vast piles of idle money (e.g. Apple), the value of the company will take into account the DCF and also the existing liquid reserves. In that case the liquid reserves will be progressively diluted by inflation and again, that's a desired outcome (in my view).