Comment by MattGaiser | Hacker News Reader

Comment by MattGaiser | Hacker News Reader

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> does this mean the federal government is owning more and more share of private companies (at least their debt portion)?

Of their debt portion, yes.

> is now trending toward the economy operated by quasi-government-owned companies?

No, as debt is not usually ownership (there are structures that allow it to become that). Companies just increasingly owe the government money, but that would happen under any traditional bailout scheme anyway.

> Is it imaginable that eventually, the US government owns the majority stake in these quasi-government-backed companies, moving the US economy further away from market-based capitalism?

Majority? That is a long long ways away. Top shareholder? It is true in Japan, so it is plausible. The Fed is not buying stocks at the moment.

https://asia.nikkei.com/Business/Markets/Bank-of-Japan-to-be...

The more concerning issue is that ETFs change management fees. Why is the Fed supporting management fees instead of buying the debt directly?

Thanks for answering my questions!

I can't agree more with your last sentence. Why Blackrock? I really want to read their reasoning of using Blackrock as a broker other than it being the biggest fund manager. The Fed is big enough and why can't it buy the bonds directly. Maybe their weak excuse is that they can execute it via Blackrock ETFs quickly. But still...then why not spread it evenly over other institutions like Vanguard, Fidelity, etc.?

FWIW, the US Government also tapped Blackrock to help with the 2008 crisis. This article talks a little bit about that choice then:

https://www.vanityfair.com/news/2010/04/fink-201004

The Fed is not set up to execute this hence ETFs, Black Rock. The Fed also wants to eliminate the perception the government owns securities in these private companies. Use an etf and you don’t have the same control or voting rights.

> traditional bailout scheme

It’s amazing how this is an accurate term now.

How do the Capitalism-is-king advocates reconcile corporate welfare?

Depends on the capitalist. I know several that intensely hate these sorts of bailouts. Some think everything should crash, others think the government should take the companies over to oversee an orderly dismantling of them.

Ultimately sarcastic comments like this aren't useful except to vent into an echo chamber, because you can't actually bucket a real person's views this easily.

Thanks for the thoughtful response. It was not intended to be as sarcastic as it read.

I don’t really think of HN as an anti-capitalist echo chamber, especially given it’s venture capitalist origins.

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