Ben Armstrong uncovers the hidden world of hedge funds in his recent video. The CoinSpeech team has collected the most important takeaways from his appearance, capturing the intricate dynamics of hedge funds like Black Rock. You can find Ben Armstrong’s new video below.
The Invisible Hand of Hedge Funds
Hedge funds own a large portion of the world’s companies and properties, yet they remain surprisingly obscure. Armstrong explains, “This is because people don’t realize when they’re interacting with hedge funds and their work is a lot more mysterious.” Unlike banks or corporations, their influence is often indirect but no less impactful, affecting everything from housing prices to political decisions.
The Housing Crisis
The housing market is in turmoil, with prices skyrocketing by 40% since the pandemic. Armstrong notes, “This growing industry buys or builds single-family homes and then rents them out,” supported by massive private equity firms like Blackstone. As a result, many Americans are priced out of homeownership, left with no choice but to rent.
Black Rock has also moved into the real estate market, now owning over $60 billion in property assets. This, Armstrong argues, exacerbates the housing crisis by making home ownership even more unattainable for average families.
Dominance of Black Rock
Black Rock is not just any hedge fund; it owns a 5% or greater stake in more than 97% of S&P 500 companies, giving it significant influence over corporate governance. Armstrong warns, “When you think about Black Rock, you shouldn’t think of them as an individual firm but kind of as an Injustice League for the financial sector.”
Black Rock’s dominance extends to the ETF market, where it accounts for more than 36%, far outpacing its closest competitor, Vanguard. This holds major implications for the financial landscape, particularly as Black Rock has gained these advantages through a cozy relationship with regulators, exploiting the regulatory revolving door.
Regulatory Influence
Black Rock has mastered the regulatory revolving door strategy, placing former Washington officials in key positions within the company and vice versa. “The firm has also had a direct line to the Treasury Department and maintained almost daily phone calls since the days of the Bush administration,” Armstrong claims. This revolving door ensures that Black Rock’s interests are often prioritized in policy-making.
Expanding into Crypto
Black Rock’s influence doesn’t stop at traditional finance; it is moving into the crypto world too. Armstrong has mixed feelings about this development: “Black Rock’s Bitcoin Holdings are now over $21 billion… they’re going to help bring real world assets into the mainstream but I definitely worry that they will create some of the same problems in crypto that they’ve created in traditional finance.”
Environmental and Social Governance (ESG)
Black Rock has started to virtue signal as an environmental activist organization. However, Armstrong remains skeptical: “Despite its tight control of financial markets and heavy influence in politics, Black Rock has managed to maintain a surprisingly good reputation.” The firm’s focus on ESG initiatives appears contradictory, as they continue to invest in industries known to harm the environment.
Given the deep ties and extensive influence of hedge funds in various sectors, it’s essential to stay informed about their activities and implications for society. “Their motives cannot be trusted,” Armstrong emphasizes. Watch the full video below to get an even deeper understanding of these complex dynamics.