The US Bond market is $52.9 trillion and the S&P has a 37 billion dollar market cap. This isn’t the kind of thing that could happen in an afternoon, but it’s not as crazy as you might think.
Lending like this shouldn’t change purchasing power for real world goods much, the point is it specifically impacts investors.
> Anyway, back to the point was hand, which was refuting yborg's claim that business leaders can just borrow willy nilly and pay themselves via gains in stock price via buying back shares.
Sure, but my point was what happens to individual companies is different than what happens to markets. If half the companies on the S&P did this then the other half would see a small price spike. The price spike in other companies would also increase the valuations of companies that borrowed, not by enough to fully offset the borrowing but still more than zero.
Borrowing isn’t required here, if Google issued a dividend for the majority of it’s reserves a significant fraction of that money would get reinvested in stocks and a small fraction of which would go back to Google.
Lending like this shouldn’t change purchasing power for real world goods much, the point is it specifically impacts investors.
> Anyway, back to the point was hand, which was refuting yborg's claim that business leaders can just borrow willy nilly and pay themselves via gains in stock price via buying back shares.
Sure, but my point was what happens to individual companies is different than what happens to markets. If half the companies on the S&P did this then the other half would see a small price spike. The price spike in other companies would also increase the valuations of companies that borrowed, not by enough to fully offset the borrowing but still more than zero.
Borrowing isn’t required here, if Google issued a dividend for the majority of it’s reserves a significant fraction of that money would get reinvested in stocks and a small fraction of which would go back to Google.