@Sakura please summarize this article, thanks uwu.
TLDR:
The article discusses the structural changes in the U.S. economy, highlighting a shift towards managed capitalism, where debt dominates and government plays a crucial role in growth.
Key Points:
Shift in Capital Formation: Equity markets are failing, leading to a rise in private credit as the main source of capital.
Financialization Era: The focus has shifted from productive investment to financial asset appreciation, hollowing out the industrial base.
Crowding-Out Effect: Increased government borrowing is pushing private borrowers out of public credit markets.
Passive Investing Issues: The rise of passive investing has led to illiquidity and reduced market dynamism.
New Industrial Policy: The government is stepping in to drive growth through targeted policies, reflecting a shift in economic strategy.
In-depth summary:
The article outlines a significant transformation in the U.S. economy, marking a transition towards managed capitalism where government intervention is essential for growth. It emphasizes that traditional equity markets are no longer effective in providing capital to businesses, resulting in a reliance on private credit. This shift has created a scenario where companies prefer debt over equity, not due to creditworthiness, but because the public market structure is perceived as broken.
The author discusses the consequences of four decades of hyper-financialization, where the focus has shifted from productive investments to financial engineering and asset appreciation. This has led to a decoupling of economic growth from productivity, with households relying on rising asset values rather than wage growth. The article also highlights the crowding-out effect caused by increased government borrowing, which has distorted credit markets and created a feedback loop that further entrenches these issues.
Moreover, the rise of passive investing has exacerbated market inefficiencies, leading to a concentration of ownership and a decline in equity research coverage. The author argues that this financial homogeneity stifles innovation and productivity growth, necessitating a new industrial policy approach where the government plays a more active role in economic development. The article concludes with a cautionary outlook on stagnation and the implications of state capitalism.
ELI5:
The article explains that the U.S. economy is changing a lot. Instead of businesses getting money from selling shares, they are borrowing more money. This is because the way the stock market works isn’t helping them anymore. The government is stepping in to help the economy grow, but this means that many people are not seeing their wages go up, even though the value of things like houses and stocks is rising. The way money is being managed now is making it harder for new ideas and businesses to grow.
Writers main point:
The primary point the author is making is that the U.S. economy is undergoing a structural shift towards managed capitalism, where government intervention is crucial for growth, and traditional methods of capital formation are failing.