Eli5: I saw that Uber is still not making money, how is that possible, they have a lot of people working for them, worldwide known and also if they dont make any money how are they still alive?
In: Economics
Rich people nowadays don’t want dividends (profits) because they get taxed off that. Instead, what they do is require their companies to put all the money into growth, so that the shares themselves inflate in value. Then when they want to buy something or pay for recurrent expenses, they take a loan backed by the inflating value of their stocks. There is currently no way to tax this, so as long as stock prices get higher, they pay no taxes. the same thing happens at the corporate level: Can’t get taxed if you made no profits.
This is at the root of why we have growth based models nowadays. and why they so far seem to work, more or less. IMHO it’s all one big house of card, a bubble producing machine which makes our economy more unstable, but what do I know? I’m no economist.
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