The biggest factor which is not considered in antitrust law is the fact that large corporations, by virtue of controlling a lot of capital, have access to a larger share of all the new money which is created out of thin air and injected into the economy as credit.
Economists are quick to point out that the new money which is created of of thin air is not given outright, but rather, it is loaned out - Therefore, by virtue of having to pay it back, corporations do not have an unfair advantage.
I disagree with this conclusion because an entity's access to loans is based almost entirely on how much collateral they possess - This necessarily implies that those entities which have more capital are able to take out bigger loans and thus derive more profits from these loans.
For example, if you have $100K in a particular asset (e.g. stocks), you can use that as collateral to borrow an additional $100K and you end up controlling $200K worth of assets in total.
So if the yield on those assets is 10% per year, you will end up getting 20% per year relative to your own capital. 20% of $100K is $20K.
So according to this principle, a company which has $100 million in assets can borrow an additional $100 million - This means that an asset class which can generate 10% yield can be bought on leverage to generate 20% yield on the initial capital.
20% of $100 million is $20 million. This means that $10 million of that profit was derived entirely from credit which was printed out of thin air by banks. That $10 million is free money and was given solely on the basis of existing capital.
This is why the rich get richer; it has nothing to do with value creation. Whenever banks print money out of thin air and inject it into the economy, everyone in the country who receives a salary in that currency ends up paying for that equally because of dilution in the value of their salaries.
In effect, this means that, salary earners and small capital owners are subsidizing big capital owners. This is what is fundamentally unfair about our financial system and why big corporations have to be limited; they're not successful because they're efficient, they're successful because they own more capital than everyone else and can thus access most of the newly 'printed' fiat money.
Economists are quick to point out that the new money which is created of of thin air is not given outright, but rather, it is loaned out - Therefore, by virtue of having to pay it back, corporations do not have an unfair advantage.
I disagree with this conclusion because an entity's access to loans is based almost entirely on how much collateral they possess - This necessarily implies that those entities which have more capital are able to take out bigger loans and thus derive more profits from these loans.
For example, if you have $100K in a particular asset (e.g. stocks), you can use that as collateral to borrow an additional $100K and you end up controlling $200K worth of assets in total. So if the yield on those assets is 10% per year, you will end up getting 20% per year relative to your own capital. 20% of $100K is $20K.
So according to this principle, a company which has $100 million in assets can borrow an additional $100 million - This means that an asset class which can generate 10% yield can be bought on leverage to generate 20% yield on the initial capital. 20% of $100 million is $20 million. This means that $10 million of that profit was derived entirely from credit which was printed out of thin air by banks. That $10 million is free money and was given solely on the basis of existing capital.
This is why the rich get richer; it has nothing to do with value creation. Whenever banks print money out of thin air and inject it into the economy, everyone in the country who receives a salary in that currency ends up paying for that equally because of dilution in the value of their salaries. In effect, this means that, salary earners and small capital owners are subsidizing big capital owners. This is what is fundamentally unfair about our financial system and why big corporations have to be limited; they're not successful because they're efficient, they're successful because they own more capital than everyone else and can thus access most of the newly 'printed' fiat money.
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