[altairprime]

The velocity up or down of { the rate of growth of profit } is the profit-linked factor that drives stock prices go up or down. Not the simple velocity of profits. The market demands corporations compete with cumulative interest to increase share prices, and that’s never a sustainable path.

[jordwest]

Ah wow of course, I think you just made something click for me.

It's strange how we take interest on cash as a law of nature, when the original intention might have been nothing more than compensation for the risk the lender was taking on.

Now the risk (on bank deposits, govt bonds etc at least) has effectively been removed so the interest rate is the baseline expectation.

So compound interest is underpinning the infinite growth forever delusion...

[altairprime]

Yeah, modern stock-market capitalism is, at its core, the layering of a 'second derivative' layer — growth in rate of growth of profit year-over-year — on top of the 'first derivative' — growth in profit year-over-year — that most non-financiers consider it to be. If you've read/seen "The Big Short" it helps immensely to consider how the layering of bets, tranches, and insurance is not the first time the financial industry has implemented widespread layering, it's just the first widely recognized time they've done so.

This is also why the market tolerates destructive private equity firms: their sole purpose is to create growth in the second derivate; that they 'pull up the ladder behind them', so to speak, by killing the business and terminating investment gains for investors in the first-derivative tier (market stockholders) and zeroth-derivative tier (capital investors), and that they kill great products in a market so that buyers are forced to buy shitty products, are recursively beneficial to more efficient cycles of vampirism.