When there is an excess of money in the economy there is also danger for inflation. In order to decrease the inflation you have to canalize the money flow to something new, to create new values. One of the best scenario is to create a bubble of the stock market followed by a crash – a lot of money (mostly virtual – electronic, existing only as computer codes and different derivatives) is burned in this way which reduces the inflation considerably. Do you remember dot.com era? It was a perfect money-burning process! Big Pharma also makes it's own impact to this process by providing vast opportunity to bind a lot of capital in form of investment into new “revolutionary” approaches like genomics, proteomics, biotech, nanotech etc etc. Nobody cares about the efficiency of these approaches – and it does not play any role, the most important from the macro-economic perspective is just the fact that the money is pumped from the real economy into something different. Once again - it can be new space race, under mountain journey race, new perpetuum mobile race – what ever but to remove the money from real economy and real consumption.
And we have to confess that Big Pharma works fine in this field. One of the leaders of creation of new
Investors are suddenly hot for biotechnology, and that helps Celgene, CEO Robert Hugin told CNBC Thursday.
"There's confidence in the technology transformation that's happening," he told Closing Bell. "People are really beginning to capitalize on the revolution in molecular biology and information technology. I think it's the fundamental science that is starting to come to the forefront that is making a difference in these [biotech] companies."
We have welcome such a behaviour – by investing more resources in such projects the investors burn their money and reduce the inflation. Nice job!
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