I disagreed with Doug’s (then) position.
The current Theranos scandal, delightful to read about in the Wall Street Journal and the Guardian, is instructive. Theranos is a company which had a supposed breakthrough method of doing blood tests for multiple diseases and conditions with only a drop of blood. It looked to some investors like the next big thing. Seriously rich people jumped in with serious investments.
Rupert Murdoch, reportedly seriously rich, is reported to have invested $100 million in Theranos. Many other famous and reportedly seriously rich people did the same. And now Rupert Murdoch is reported to have lost his $100 million.
These investors were not looking for municipal bonds to deliver their spending money each quarter. They were still actively looking for stocks that were going to go up. They were getting into the stock while it was cheap, or at least so they thought.
The names involved are interesting. George Schultz and Henry Kissinger. Riley Bechtel and others, like General Mattis, soon to be Secretary of Defense.
Murdock didn’t have, I am guessing, $100 million in cash in a shoe box in one of his closets. Perhaps he sold some other shares. Likely he took out a loan for some of the scratch. Murdoch is a good proxy for how seriously rich people “hold” their money. They don’t settle into old age getting the interest on municipal bonds. They keep actively looking for ways to get richer, and borrow money to leverage the gains.
Here are some links to the story:
Go here for a summary:
https://www.theguardian.com/media/2016/nov/29/rupert-murdoch-theranos-investment-wall-street-journal
Go here for the WSJ story putting this on the front pages. There is already a movie deal based on this. Fascinating account of the whistle blower and his grandfather, George Schultz.
http://www.wsj.com/articles/theranos-whistleblower-shook-the-companyand-his-family-1479335963
There are many other stories, from Bloomberg et. al.
Gene
> On Dec 11, 2016, at 2:04 PM, Ralph Johansen <mdriscollrj at charter.net> wrote:
>
> /Tue Nov 29 18:19:56 PST 2016 /Carrol Cox wrote
>
> In an old lbo post, Doug wrote: Seriously rich people tend to move assets into municipal bonds and other fixed-income investments; they own claims to revenue, not surplus value.
>
> Can this be expanded on. And also --
>
> As of several years ago, BlackRock Investment Management held or managed assets of over 4 trillion. Also a bit of miscellaneous bits. Over 400 employees at JPMorganChase are devoted solely to relations with BlackRock. BlackRock also has its representatives on the Boards of major corporations. (I believe its CEO might have become Sec. of the Treasury in a Clinton cabinet.)
>
> I really have only the vaguest idea of "investment management," so all clarification is welcome. And my main question: How does the existence of such corporations relate to the statement quoted above. Who owns the corporations & how do the 1% "hold" their money?
>
> Carrol
>
> "... claims to revenue, not surplus value." Response to this question calls for a Marxist analysis, at least as I have learned from reading Marx and understand what he has written, and in that framework the question answers itself. All value derives from human labor in productive activity, not rent, not interest, not property valuation; that is, all value derives from surplus value, including value embodied in so-called "revenue, municipal bonds and other fixed-income investments." All financial assets are a claim on future value, which then is derived solely from and must return for ultimate satisfaction to future surplus labor. There can be no "revenue" in this scheme of things that is not so positioned. At some point in the last thirty or forty years or more debt, instead of productive activity, financial speculation became, if not primary then evermore important as a source of revenue and profit. Finance, while essential to expansion of industrial capital, increasingly became a thing-in-itself. And the problem, of course, is that the can will be kicked down the road only for so long in this debt-saturated economy, but while there will be future surplus value there is no way that these several hundred trillions of dollars in principle and interest, and growing, on these debt-claims on anything like such an increasing, equivalent quantity of surplus value can be honored. Bail-outs of financial institutions and manipulation of the money supply and Keynesian stimuli to investment and payment only of accumulated interest and passing the problem onto the backs of those least able to pay while they can still pay can be stopgaps but these claims are nonredeemable, and at some point they will be called in and we're hanging by our thumbs and great must be the fall thereof.
>
> That's how I understand it. You?
>
>
> ---
> This email has been checked for viruses by Avast antivirus software.
> https://www.avast.com/antivirus
> ___________________________________
> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk