In fractionally reserved economies however, when interest rates are manipulated lower artificially and money & credit creation is continuous, lower interest rates benefit those entities that are closest to the central bank first.

This results in high barriers to entry in business and industry, industrial overcapacity thus the misallocation of resources and, eventually, the unnecessary depletion of natural resources. All through this process, the cost of living rises paving the way for gradually more onerous fiscality.

Not quite.

The asymmetrical purchasing power advantage enjoyed by those entities that have first access to money, guarantees the eventual monopolisation of business and industry. Granted this is a process but, eventually, the arithmetical advantage enjoyed by the finance industry ends up absorbing all profits thus ownership of productive capital


Relevant excerpt:

“The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company’s operating revenues, to map the structure of economic power.

The work, to be published in PLoS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What’s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues.

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions.”

In which we are talking about two different processes. Financial corporations purchasing shares or even controlling interests are not ‘new entrants’, they are purchasing existing [profitable] businesses.

New entrants however are new entrants qua new entrants. Their business model if it is predicated on low costs of capital predispose to mis-allocation of capital and resources as already detailed.

The issue of Corporatism has been around since Rockefeller. They have been careful to smear capitalism with responsibility for their misdeeds.