August 23, 2023: Investor and author Vivek Ramaswamy has called the investment firms BlackRock, State Street, and Vanguard the “most powerful cartel in human history.”
In a recent article for The Wall Street Journal, Ramaswamy argued that these three firms, which together control over $20 trillion in assets, have amassed so much power that they are now able to dictate the terms of the global economy.
“These firms are not just passive investors,” Ramaswamy wrote. “They are active market makers, and they use their power to influence the prices of stocks, bonds, and other assets.”
Ramaswamy also argued that these firms are using their power to enrich themselves at the expense of ordinary investors. He pointed to the fact that the fees charged by these firms have been rising steadily in recent years, while the returns that they have generated for their clients have been declining.
“These firms are extracting trillions of dollars from the global economy every year,” Ramaswamy wrote. “And they are doing it with impunity.”
Ramaswamy’s article has been met with a mixed reaction. Some have praised him for shining a light on the power of these firms, while others have accused him of being alarmist.
“I think Ramaswamy is right to be concerned about the power of these firms,” said Michael C. Feroli, chief economist at the Federal Reserve Bank of New York. “But I don’t think they are a cartel in the traditional sense. They are competing with each other, and they are also subject to regulation.”
Regardless of one’s opinion of Ramaswamy’s article, there is no doubt that the power of these firms is growing. And as they continue to grow in power, it is important to be aware of the potential risks that they pose to the global economy.
Here are some of the key takeaways from this article:
Actionable and practical takeaways: