Fed should pay every American more, let hedge funds and billionaires ‘get wiped out,’ says Social Capital CEO

- Advertisement -
- Advertisement -
- Advertisement -
- Advertisement -

Is the Fed’s massive coronavirus stimulus package helping the ultra-rich at the expense of ordinary American workers? That’s what Chamath Palihapitiya, chief executive of venture-capital firm Social Capital LP, argued Thursday.

“On Main Street today, people are getting wiped out. Right now, rich CEOs are not, boards that have horrible governance are not. People are.”

— Chamath Palihapitiya

Appearing Thursday on CNBC’s “Fast Money Halftime Report” Palihapitiya said the U.S. shouldn’t be bailing out billionaires and hedge funds when it’s the people on Main Street who are the ones actually getting hurt.

Jobless claims hit nearly 17 million on Thursday, and are likely even higher as businesses across the country close in an effort to slow the spread of COVID-19. Economists say the unemployment rate has likely surged above 10% and will only get worse.

Palihapitiya’s argument, basically, is: Let those businesses fail, but without layoffs, and let the rich stakeholders absorb the pain.

When a business typically fails, Palihapitiya said, “it does not fire their employees,” instead going though a bankruptcy process that often preserves pensions, and employees end up owning more of the company in the end.

“The people who get wiped out are the speculators” who own debt, and the equity holders. “These are the people that purport to be the most sophisticated investors in the world. They deserve to get wiped out,” Palihapitiya said. “But he employees don’t get wiped out. The pensions typically don’t get wiped out.”

A baffled Scott Wapner, the show’s host, asked why anyone “deserves” to get wiped out.

“Just to be clear on who we are talking about. We’re talking about a hedge fund that serves a bunch of billionaire family offices. Who cares? They don’t get the summer in the Hamptons?” Palihapitiya said. “Who cares? Let them get wiped out.”

“What we’ve done is disproportionately prop up poor-performing CEOs and boards, and you have to wash these people out,” he said.

The Fed on Thursday set up a new $2.3 trillion lending program to help prop up small and mid-sized businesses.

But Palihapitiya argued that rather giving workers relatively small $1,200 checks, the U.S. would be better off giving everyone larger payments directly, and skip businesses entirely.

“It would be better for the Fed to have given half a million to every man, woman and child in the United States,” he said.

Later, Palihapitiya tweeted that Americans should also get their 2019 taxes refunded as a form of universal basic income.

Silicon Valley-based Social Capital specializes in investing in startups that serve the greater good, such as health care, education and financial services, with about $1.2 billion in total assets.

Home of Science
Follow me

- Advertisement -




Women’s FA Cup Highlights: Arsenal 0-2 Chelseaon April 17, 2022 at 2:10 pm

Watch highlights as Guro Reiten and Ji So-yun score to send Chelsea through to the Women's FA Cup final with a 2-0 win over...

Covid: Shoppers swap party clothes for loungewearon January 11, 2022 at 12:07 am

Comfy clothes were back in fashion after people were advised to work from home.

Unimaginable pain over boys’ Solihull lake deaths – aunton December 13, 2022 at 2:30 pm

One victim is named locally as Jack Johnson, 10, as the Solihull community mourns their loss.Image source, PA MediaBy Riyah Collins, Nick Garnett &...

Covid: US fully approves Pfizer vaccine for children over fiveon November 3, 2021 at 12:33 am

Children aged five to 11 can now receive the Pfizer jab, clearing the way for millions to get vaccinated.Image source, Getty ImagesThe US has...

Isles of Scilly walrus spotted off Republic of Irelandon August 2, 2021 at 8:33 pm

Wally has been on the islands since June and has travelled thousands of miles around Europe.
Home of Science
Follow me