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Re:Businesses are in for a mighty debt hangover by carlosjobim on Wednesday May 17, 2023 @07:05AM (#35973662)
All money is created by banks issuing debt, so it makes complete sense that people want to be as close to the money tap as possible to siphon from it. The alternative is trying to build up a productive business in the extremely competitive and harsh free market, where you have to deliver to customers, who are free to choose. Who wants that hassle when you can just pretend being a business and keep on borrowing?
Re:Businesses are in for a mighty debt hangover by CapstanRoller on Wednesday May 17, 2023 @06:32PM (#35982063)
>so it makes complete sense that people want to be as close to the money tap as possible to siphon from it

This is known as the "Cantillon Effect"[0], and it also explains the concept of biflation[1]: if you're close to the money tap and there's a surge of money, you can profit from arbitrage before that money hits the larger economy and spreads out. The further away from the money tap you are, the less you're able to profit from changes in money supply. This creates perverse incentives for large well-connected business entities, typically centered around schemes involving juggling debt and skimming margins off that.

Eventually every business model starts turning into some variation of a pump and dump scheme. We see this most prominently in crypto, but also in the traditional economy (stock buybacks, real estate speculation, etc).

When enough of the economy turns away from production to speculation, the entire thing falls over and implodes. We don't know the exact point when this happens, and it's probably impossible to model, but history tells us it eventually does happen.

[0] https://en.wikipedia.org/wiki/Richard_Cantillon

[1] https://www.investopedia.com/terms/b/biflation.asp