I am not surprised that he has come out of the closet.
Numerous videos of his statement on Twitter
https://twitter.com/i/status/1736063813634465825
From his statement
“Libertarian economics was a scam perpetrated by the beneficiaries of the economic system that they were defending,” Carlson told Greenwald.
“So they created this whole intellectual framework to justify the private equity culture that’s hollowed out the country,” said Carlson. “A smarter way to assess an economic system is by its results.”
“I think you need to ask: ‘Does this economic system produce a lot of Dollar Stores?’” said Carlson. "And if it does, it’s not a system that you want, because it degrades people and it makes their lives worse and it increases exponentially the amount of ugliness in your society. And anything that increases ugliness is evil . . .
Yup I think McDonalds are ugly too.
We need more government to outlaw ugly things. (/sarcasm)
Oh for ■■■■■ sake.
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What Tucker calls “the private equity culture” may or may not be a problem.
Let’s set that aside and assume it is. For the moment let’s just pretend “There is a private equity culture in America and it is a problem.”
A proponent of small government would say it is the result of an expanding Fed (and call for less Fed and therefore less government.)
Carlson’s statement is the opposite. It is exactly what one would expect from a person who is always bashing industry, corporations, capitalism and free markets and calling for more big brother government to save us from ourselves.
Tucker is complaining about the very system that he advocated for decades.
It’s not like he had a come to Jesus moment… He just recognized that economic populism sells to his audience and that is where he is going.
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Cronies have always used the power of the government to stifle competition and monopolize markets. There are very few actual “Libertarian” marketplaces in America.
Monopolies exist today, because the government does not use the tools to break them up, and allows far too many monopolies to be created. Has been this way since 1981 or so…:
We have the illusion of choice, when in fact most industries are controlled by a handful of companies.
The “private equity” culture is nothing more than a Fed that has grown too large, way beyond its original mission.
Two examples of the ahem “private” equity culture in action.:
1. Why did Sam Bankman Fried buy a bank?
Was it because banking was a better investment than crypto or any other investment he could find?
Of course not, it is because owning a bank gave him access to Fed funding windows.
- Need money for your schemes?
- Free market won’t lend it to you?
No problem call yourself a bank, by any means necessary, and you get access to all sorts of Fed windows and Fed programs and those will allow you to fund your schemes. He bought a tiny bank with one branch and 3 employees and used it as a private piggy bank so he could access Fed windows and Fed facilities. (Only catch is Fed money is short term money, eventually the bank must bundle the loans together and sell them to investors.)
2. Same deal with SVB.
Only difference with SVB was that the bank was set-up with the model "If it works for FTX it will work for multiple venture capitalists. Let’s be a middle man giving a group of venture capitalists Fed money to fund their risky schemes." (Again, the only catch is Fed money is short term money, eventually the bank must bundle the loans together and sell them to investors.)
Conclusion:
In both cases the “libertarian” free market said “No way we will not fund that risky scheme. It’s too risky.” In both cases, because the Fed is large and expansive, private equity could form a bank (real or paper) and thus private equity get access to Fed funds as a sort of bridge, temporarily funding their enterprises until the venture loans could be bundled and sold. . . . Hence the private equity culture Carlson speaks of is a monster created by an ever-expanding Fed, not by the free market, not in accordance with libertarian principles.
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So . . . there is no pressing need to read my long post above.
One need not adopt the libertarian side of the question to know that it exists.
Carlson, faced with the real or imaginary problem of venture capital and too many Dollar Stores (naturally) blamed free market libertarianism. In fact the problem probably is that the Fed is too large.
The problem might not be too much libertarianism, but too little.
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That’s the exact problem. Since the days of John D. Rockefeller, monopolists have been using government to stifle competition.
I have no evidence that “monopolists” are part of the equation whatsoever.
The rise in private equity (especially in tech) in no small way coincided private equity figuring out how to game the system.
Buy a bank, even a tiny one, and you get access to all sorts of short-term funding the free market would not offer, provided the bank eventually bundles and sells it. (That is what banks do.)
You can do it for one firm like Sam Bankman-Fried did, or, like SVB, you can create a clearing house providing free money to all sorts of risky schemes and start-ups. You get to play Shark Tank and use the Fed’s money to do it.
Monopolists are not even part of the equation.
SBF operated a hedge fund and a crypto exchange… not a bank in any real sense.
They bought a teeny tiny bank.
Why did they buy a bank?
What was their reason.
They bought it surreptitiously and under the radar of regulators.
If they had actually tried to make moves with it… the whole thing would have been squashed pretty quick.
As far as the bankruptcy showed… Alameda Research poured millions into buying a small bank…. But they didn’t really do anything with it.
My bet though is that they were trying to lay into place having FDIC cover for their deposits and that is why they bought it.
Harrisburg PA in the late 1980s a successful single-family residential property developer name John Vartan wanted to move into a branch of construction Harrisburg had not had in decades. He and his partners wanted to begin building high-rises.
No national bank would take the risk (lending him money it obtains from the Fed and then slowly selling that debt into corporate bond bundles.)
No regional bank would take that risk.
So John Vartan found a tiny bank (Dauphin Deposit) and bought it. (Ironically with borrowed boney.) He then had his own bank issue the loan. His own private bank was able to access money form the Fed, lend it to his construction company, and then slowly over the course of several months sell the debt into corporate bond bundles.
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I don’t think that Alemeda research was interested in that. They were more interested in getting FDIC coverage for their deposits. The purchase of the bank was made the same year that FTX and other crypto exchanges were sent a cease and desist from the FTC claiming FDIC coverage.
Bankman-Fried needed/wanted money for all sort of projects.
- His own crypto.
- His own Crypto exchange.
- His own middle-man firm.
- Bailing out Krakken, tether and every other bankrupt firm ever to grab a headline.
(He was going to save the entre industry, remember?)
But the point goes well beyond Sam Bankman-Fried.
All of SVB did nothing but this on a larger scale.
Past:
Banks access Fed money windows, get short-term loans, lend money to the public and slowly sell the loans into bond bundles (mortgage bond bundles, corporate bond bundles etc…
Present:
Shark-tank style private equity types are looking for partners and loans for the risky hit-or-miss schemes. Like a robot pizza truck business to be run by people who know nothing about pizza or about trucks and have never run a business, (but did once run a WoW Guild.) They fill-out paperwork to become a bank on paper. They then access Fed money windows to fund their risky schemes.
The problem is not too much capitalism.
The problem is not too much free-market.
The problem is too much Fed which will fund any tumble weed that blows down a dusty road.
But there is nothing that has come out in the FTX bankruptcy or the SBF trial that shows that this happened.
A foreign base hedge fund buying a domestic bank barely flew under regulatory radar. If they tried shenanigans that would have sent up a ton of red flags.
No red flags because it is legal.
Banks can make loans to whomever they want, even insiders, even the bank president’s golfing buddies.
The Fed did not even review Farmington for making crypto transactions
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I will let you decide for yourself how widespread you think this sort of thing is, (Tucker Carlson thinks we have an entire “private equity culture” that has somehow “hollowed out the country,”) but if you are as smart as I think you are,
- you will not pin your arguments to whether of not SBF and Farmington actually completed their plans.
- you will not pin your arguments to the notion that private equity exists without borrowing from “banks.”
