The Biggest Ponzi Scheme on the Planet-The U.S. Government
"American Economic Exceptionalism Explained"                     USAPonzi                                      by John W. White   Mar 29, 2013

Stock Buybacks-A Byproduct of USAPonzi
Oct 23, 2014
As posted on
www.usaponzi.com


As this website has explained (see Introduction to USAPonzi), USAPonzi has dramatically undertaxed U.S. citizens and businesses thereby creating $98.1 Trillion of counterfeit money over the last 46 years and as a result has

 

1) provided massive stimulus to the U.S. (and global) economy; 47% of FY2015 GDP is created by USAPonzi (see U.S. "Real" GDP FY2015).


2) caused many U.S. citizens and businesses to appear to be much richer than they really are; nominally 7X (see U.S. Total Assets Bubble).


3) and caused many U.S. businesses to appear to be much more successful, profitable, and valuable than they really are and as a result they have collected huge amounts of counterfeit cash on their balance sheets (see Asset Prices to Infinity).


By undertaxing the U.S. citizens and businesses by $98.1 Trillion over the last 46 years, USAPonzi has caused many, maybe even most, U.S. businesses to appear to be much more successful, profitable and valuable.  Because the U.S. citizens have a lot more (counterfeit) money to spend they can buy a lot more of the products and services of these businesses which makes the businesses appear to be more profitable which causes the stock prices to go up (see Why Stock Outperform Bonds!) and causes these businesses to collect more cash on their balance sheet which allows the businesses to pay dividends to shareholders and to enhance the pay of the key employees and executives (see USAPonzi-A CEO Pay Bonanza).


Because USAPonzi has created so much counterfeit money ($98.1 Trillion over the last 46 years) many of these U.S. businesses, even after overpaying their employees and executives, even after paying dividends to their shareholders, still have a huge amount of counterfeit cash on their balance sheets that they do not know what to do with.  The activist investors are having a field day coming up with ideas for how to make even more money for themselves and often times the proposed tactic is "stock buybacks".


"Stock buybacks" provide another dimension to the artificial escalation in the price of equities and is therefore just a booster rocket that is added to the USAPonzi arsenal of stimulus that is causing Asset Prices to Infinity.  "Stock buybacks" are much like "stock splits" in that they do not fundamentally change the value of a company but they do affect investor psyche since they introduce a "well-informed"(?) and well-heeled buyer of the stock.  But this just means that the companies cannot find a more productive use of their counterfeit cash than reinvesting it in the very Ponzi scheme that created this counterfeit cash in the first place.  Further, these "stock buybacks" provide a convenient and well heeled buyer for insiders to sell to as they transition their often times counterfeit stock holdings to other asset classes often times through "programmed selling" (pre set and automatic selling of stock).


This further escalation of stock prices increases the value of executive and employee stock ownership and stock options which further expands the income and wealth gap that was highlighted by Federal Reserve Chairwoman Janet Yellen (see Yellen warns of rising income gap).


I therefore contend that USAPonzi has made "stock buybacks" a much more frequently used tool by corporations to monetize the value of equity holdings.


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