[rorykoehler]

From where I am standing it seems capitalists feel entitled to free cash. They take their capital, dump it in the stock market and hey presto free cash! This free cash mostly arises due to some accounting trick and is not productivity backed at all.

[meric]

People who see the stock market that way are merely gamblers and will have their chips taken away in the next financial crisis.

During 2014-2015 I've participated in a lot of share issues to provide cash for gold mining companies requiring capital to move into or expand production.

These are companies with a few hundred shareholders or so.

The profits I've made in the past few months from gold mining companies, I think is perfectly justified. I've done my research and invested in these companies when everyone else has shunned gold and gold related investments. These were companies whose market capitalisation were less than their projected cash flows for the next year. I've invested in these companies when few other people would.

These gains I've made, are completely backed by productivity. Without these latest round of share issues, many of the companies would have gone under, and there would be no gold coming out of the ground.

(You could argue gold has no value beyond being a good material and I'd respond, neither do paint or flowers. With gold, people can use it as an asset without counter party, and provides zero interest, guaranteeing capital during times of negative interest.)

[rorykoehler]

I don't resent anyone who chooses to play the game and wins. We just make the best of the system we exist in however I do believe in being honest about the system too.

Gold has a value purely due to it being vital in many technologies. That said I can't imagine the price we pay for mined material, gold or otherwise, even comes close to reflecting the cost of what it will take to repair the damage we are doing to our environment during the extraction of these materials.

Regarding productivity there are many instances of financial products which are not even remotely linked to any kind of productivity. If the stock market was strongly linked to productivity the down cycles it experiences would be minor in comparison to what they are.

[meric]

Yes, I only invest in gold mines in my own country, where there are more strict protocols with regards to the environment, where a 'environment cleanup' bond must be lodged with the government before mining begins. The area is rehabilitated when mining completes.

The down cycles and bubbles are pumped up by central banks. When the stock market isn't doing well central banks lower interest rates, encouraging people to take out loans, to buy houses and stocks, and if they didn't, the central bank would lower the interest rate until they did.

It is market intervention that is exacerbating the phenomenon you're talking about. A small down cycle is a healthy event that cleans up all the almost productive companies and reallocates their capital through liquidation. It is zombie companies propped up by government subsidies and central bank intervention that is causing the rot in America's economy. It is akin to a forest fire burning all the weeds so the forest can rejuvenate.

[tomp]

Which accounting trick?

[rorykoehler]

There are many. To name a few: synthetic CDOs (the 2008 mortgage crisis), insider trading (Martha Stewart), rate rigging (LIBOR scandal), Ponzi schemes (Madoff) and straight up cooking the books (Enron).

I hope that's enough to refresh your memory? It's irrelevant to my original point though as capitalism is by definition hoping to get something from doing nothing (or making money work as the propagandists like to dress it up as).

[tomp]

Apart from Enron, the rest have little to do with capitalism but mostly to do with markets (or, more precisely, our fucked-up financial institutions and deficient financial regulations).

> It's irrelevant to my original point though as capitalism is by definition hoping to get something from doing nothing

You have to be really stupid to think that, and deny all the benefits to our society that capitalism enables. Or, could you please explain how you would e.g. start an airline, or build a hospital, or your house's sewage system, without utilizing capital?

[rorykoehler]

>You have to be really stupid to think that, and deny all the benefits to our society that capitalism enables.

I never did that. I'm well aware of the benefits capitalism has brought society, just as I am aware of the damage it has also caused. I can guarantee you the majority of capital pumped into businesses does not come from the people who will do the work.

[tomp]

> I can guarantee you the majority of capital pumped into businesses does not come from the people who will do the work.

Well, it comes from the people that invest money (investors), others invest work/time, and they all get the benefits.

Funny enough, a large chunk of invested capital these days (both in equities/index funds, as well as hedge funds and PE/VC) comes from... drumrol: workers (or, more precisely, their pension funds)! In this case, I actually totally agree that it's stupid and unrealistic to expect a risk-free, forever-growing, >4% compound return by doing what everyone else is doing, but unfortunately, the whole pension system is flawed this way, there's not much we can do about it (individually).