Dr. Martin Hash Podcast

The stock market is held aloft by companies buying their own stock, and people assume that's a good thing because they naively think that a company wouldn't do that unless they knew everything was copacetic, but the truth is almost the exact opposite. First, stock buybacks are a scheme to increase corporate earnings per share because there are fewer shares outstanding per the profit, which triggers big bonuses for the CEO and other managers.

Secondly, companies buy back their stock to intentionally increase its price then reissue new shares to take advantage of the increased price they precipitated in the first place. It's an easy way for a company to make money by manipulating the game, and sometimes the only way a company makes money. Normally, such a scheme would be discouraged due to interest costs so it’s only possible when The Fed is trying to gin up the economy by keeping interest rates near zero. The companies never even pay off the debt with any of their own money, they just keep borrowing more to only pay the interest, and The Fed continues to facilitate the Ponzi scheme by purchasing the corporate debt used to buy the stock, so-called junk bonds. Stock buybacks, private individuals getting ultra-wealthy simply by exploiting the holes in the financial system, are an example of what gives Capitalism a bad name.