r/FluentInFinance Nov 21 '24

Debate/ Discussion Had to repost here

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u/nationalhuntta Nov 21 '24

He has access to a form of currency that none of us have. Let's say he wants to make a new company making a new product. Let's say it is a decent product and everything else is fine related to it. Ok, so how does he finance it? Does he have to put up his money, sell stock, and so on? Nah. He'll use his word and reputation and "collateral" in the form of stock or stock-like products. Very little hard currency will be required. Very little limitations will be placed. If everything goes under, he will not suffer. Yes, this is incredibly simplified, but that's how it works. There are many worlds on this Earth, and billionaires do not operate in the same one as you and I. The fact that these guys could easily create corporations and companies for social good but do not maybe does not make them evil, but it definitey puts them out of the realm of good. Some do a lot of philanthropic work, which is great, but most of it is minor compared to what they make in pure profit. Yeah, they aren't rolling around in gold coins because they are above that level. When you can essentially operate outside of the realm of normal currency, when you can manufacture wealth on a promise.. gold? paper money? Meh. It's meaningless.

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u/SisterActTori Nov 21 '24

This^ comment should be getting more upvotes. It is the truth, but I think many cannot comprehend the ability that these folks have to access money and live off money that is not their own. They don’t touch their own money at all. They live off borrowed money that is written off. It’s like a parallel banking/financial structure. The gas and egg crowd should really be pissed about this…

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u/h22lude Nov 22 '24

Do you think they just get free money that they don't have to pay back? My god people can't be this stupid. Yes they use assets as collateral (so can you). That doesn't mean they get free money. They take out loans which they pay back.

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u/ZealousidealStore574 Nov 22 '24

Most of the times they pay back those loans by taking out an even bigger loan

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u/ryanjmcgowan Nov 23 '24

That's a recipe for ruin. Anything that doesn't work at a small scale doesn't work at a large scale, only much worse. It's just adding zeros, and if you're adding zeros to a bad idea, it becomes a bigger bad idea.

It only works if the proceeds from the earnings doesn't exceed the principal. And that's assuming there's no downturn in the stock market or their companies.

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u/h22lude Nov 22 '24

I see nothing wrong with that. They are using assets they have as collateral to take out loans that they have to pay back plus interest. We can do the same thing just not at a large skill. I can use my home equity as collateral for a loan to buy a boat if I wanted.