Who owns America and its economy?
December 9, 2023: We often debate over who has the biggest influence on the US economy. In simple words, who owns America – the most powerful country on the planet? There are dozens of views, counterviews, and conspiracy theories. But can we ever know the truth about who the real puppet masters of the US are? This special report seeks to answer the million-dollar question.
To know who controls a nation, look for who controls the economy. So, who primarily controls the US economy today? Essentially, three American companies – BlackRock, Inc., Vanguard Group, and State Street Corporation.
They are not quite household names yet. But they are the world’s three most powerful asset management companies. They control 90% of what are called ‘index funds’. Through that, they control 90% of Corporate America. Unseen faces and undisclosed families who own BlackRock, Vanguard, and State Street are effectively the biggest controllers of modern-day US and its economy. Let’s find out what these companies actually do, what index funds are, and why the world knows so little about who owns America today.
The United States is a de facto empire. It is the most intimidating country of our times – economically, diplomatically, and militarily. It is a global bully that fights dirty wars without consulting anybody, including the United Nations. US troops are perpetually deployed for strategic purposes all over the world. The American government alone decides which is a rogue nation and which is a democracy. Most importantly, the US is the epicentre of the world’s biggest, wealthiest, and most powerful multinational companies on the planet.
Why Indians should be worried
Most Indians today are completely unaware of their actual relationship with the US, especially Corporate America. Thousands of US companies have immense control over the Indian DNA and psyche, just like they have done on all continents. It is never acknowledged as a socioeconomic invasion and a masterplan to corner Bharat’s financial resources, but Corporate America has been doing precisely that since the early 1990s.
An enormous number of US multinationals are known to be soaking up money from the Indian economy at an alarmingly fast rate, through international trade and repatriation of profits. Of the 17,000-plus foreign companies that currently have a footprint on Indian soil, the majority are American businesses. In this context, it’s important for every Indian, not just every American, to know who pulls the strings in the US economy.
Forget celebrity CEOs, rockstar brands, secretive elites, and the Silicon Valley. At the top of the power pyramid are these three asset management companies – BlackRock, Vanguard, and State Street. Before we go into what they do, let’s quickly understand how rich and powerful they are.
First in our line-up is BlackRock. The New York company controls assets worth $9.4 trillion. Want an idea of what that amount means? $9.4 trillion is way higher than the combined assets of Bill Gates, Elon Musk, Mark Zuckerberg, Gautam Adani, and Mukesh Ambani!
Next, there’s Vanguard, headquartered in Pennsylvania. It controls assets worth $7.7 trillion. The third member of the gang is Boston-based State Street, a financial player since 1792. It controls assets worth $3.7 trillion. These three companies literally own the corporate landscape of the US. If you put together the stocks they manage, the trio has a combined $20.8 trillion in their pockets.
That figure is more than all the sovereign wealth funds put together. They’re the major shareholders in 40% of all publicly listed US companies. In the S&P 500 financial market index, they’re the dons. They influence 90% of the big shots such as Apple, Microsoft, and Coca-Cola. So, now you have a clearer picture of who owns America.
Now, let’s look at what these three super-companies do for a living. They are basically asset management companies or AMCs. What is an AMC? It’s a company that collects money from clients, and then on their behalf, it uses the money to buy, sell, and manage assets or stakes in profitable companies. In simple words, it is a high-profile ‘dalaal’ or agent, which helps clients manage their wealth and invest in profitable assets and bonds.
There are various types of asset management companies out there. The traditional ones are those that help clients buy, sell, and manage assets of specific companies. Those asset managers are called ‘active fund managers’. You can also call them traditional fund managers, for better understanding. You have heard of many major traditional fund management companies – such as Goldman Sachs, JP Morgan, Morgan Stanley, Citi, Credit Suisse, Allianz, and Fidelity. They manage portfolios of clients who invest in stocks of specific companies.
Three kings of ‘index funds’
Let’s now come to the Big Three – BlackRock, Vanguard, and State Street. They are a completely different type of asset management company. They don’t deal in traditional funds. Instead, they manage ‘index funds’ on behalf of their clients. What are index funds? How are they different from traditional funds? We never hear about it in the daily news. How come it is so important but most people haven’t heard of it?
Let’s understand what an index fund is. It is a new type of mutual fund or bond or stock, which is designed to mimic the performance of the entire financial market. In simple words, an index fund is something that does not represent stakes in a particular company or in a particular set of companies. Instead, it represents the entire financial market index, such as the S&P 500 Index, for example. The S&P 500 is a stock market index that tracks the stock performance of 500 biggest companies listed on stock exchanges in the US.
When you own an index fund, whatever happens to the financial market overall, say if it goes up or down overall, gets reflected in your index fund’s performance. If the financial market index goes up or down, your index fund’s value gets adjusted accordingly. If the overall market crashes, your index fund crashes by the same degree. If the overall market shoots up, your index fund shoots up by the same percentage. In simple words, your index fund is a small collection of stakes in all the 500 companies in the financial market.
I gave you this detailed picture because it matters to you. BlackRock, Vanguard, and State Street sit on top of the biggest American firms whose brands are household names across Indian neighbourhoods. The question is: these Big Three companies were nowhere in the scene about 10-15 years ago. How did they suddenly become so big and powerful? How did they capture the US economy without the common people noticing it?
The answer lies in the 2008 financial crisis – a crisis that the US gifted to the whole world. The year 2008 was a turning point for the biggest investors in Wall Street. When the financial crisis happened, big investors were shaken. They were scared. They panicked and started running away from traditional funds. They started pulling their money out of traditional assets, and began purchasing index funds. Why did they go for index funds? Because they found them much safer and also much cheaper to manage, compared to traditional funds.
This is when BlackRock, Vanguard, and State Street stepped in. They capitalised on the mood, offering wealthy clients and nervous investors their services of managing their index funds. In one clean sweep, dozens of traditional asset managers lost their customers, and therefore, lost their influence over the US economy.
Who owns America? A change of guard
Almost overnight, the Big Three companies took control of most of the index funds out there. From a slightly democratic scene where dozens of asset managers had somewhat equal market share, Corporate America switched to pure monopoly. Only the three index fund managers captured total control over the corporate landscape. How? By managing a vast majority of the stakes in the 500 companies through index funds, they went into a position to dictate terms to them.
The numbers will give you a clear picture of how enormous the change was. From 2007 to 2016, traditional funds saw an exit of $1,200 billion. All that money went into the purchase of index funds, which saw a total inflow of $1,400 billion. From 2017 onwards, the inflow of investments into index funds went up at an even faster rate.
Guess who received most of that investment money? You got it — the Big Three. The irony is, BlackRock, Vanguard, and State Street dominate the US economy just like the way the US government and the US military try to dominate the rest of the world. The Big Three are the bouncers. They decide who gets into the corporate party. They decide who can own a stake in which major company. They influence policy in some of the biggest corporate boardrooms on Earth.
For those Americans who have an imperialist-mindset, who support their government’s unwelcome foreign interventions, the Big Three’s rise is like a taste of their own medicine. Their own corporate landscape is now in the hands of these three corporate interventionists. From outside, the US corporate sector looks balanced, democratic, evolved, and idealist. In reality, 90% of the investor class and 90% of the owners of the most popular brands are puppets of their new masters: BlackRock, Vanguard, and State Street.
There’s an old saying: ‘power corrupts, and absolute power corrupts absolutely.’ It’s the same story with the Big Three. They don’t just own everything. They influence everything. If BlackRock, Vanguard, and State Street want to suddenly bring down an industry, they can do it. If they want to prop up an industry overnight, they can do that as well.
The question of who owns America is a serious concern for Indians, who live in a country that has been a target for foreign corporations and foreign corporate families for centuries, especially those from the Anglo-American West. If the Big Three can turn the US economy into their playground, they would someday soon do that with the Indian economy as well. Perhaps, that’s already underway, and we’re not noticing it.
From aviation to technology, from food to banking, from healthcare to entertainment – the Big Three controls almost every industry under the sun. BlackRock, Inc. has 89 offices in 38 countries. Vanguard Group has operations in over 20 countries. State Street Corporation has at least 29 global offices.
The bad news for neocolonial targets such as Bharat is, all three are expanding very, very fast. We don’t know which of the world’s most influential business families actually own these three giants. But what we do know is that they are getting bigger and bigger on the Indian horizon. After all, you often hear western powers saying aloud that the Indian economy is the world’s fastest growing market. Should we allow another replay of the nightmarish movie called East India Company?
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