From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Tue Mar 21 2006 - 11:38:31 EST
The suggestion that I am making is that a source of the inflow of funds into the US is capital acquisitions. When the stock of capital for acquisition becomes constrained, then the inflow of funds would also tend to fall. Private equity investors act in their own interests, they are not concerned with propping up the dollar. In this they differ perhaps from the Bank of China. _____ From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Jerry Levy Sent: 21 March 2006 13:16 To: OPE-L@SUS.CSUCHICO.EDU Subject: Re: [OPE-L] Crashes, adjustment, and the long-run Hi Paul C, > To answer with another question: > How many years would it take at the current rate of deficit > for the entire fixed capital stock of the USA to pass into the > hands of overseas investors? I assume you mean 'at the current rate of change'? > Would this point not act as a limit? Why? The issue isn't how long it would take for the fixed capital stock to become fully owned abroad. The issue is, if you are projecting a crash in the long-run, how long is the long-run? Also, I don't see any reason to necessarily believe that foreign ownership of the fixed capital stock in the US would cause a crash in the US. Indeed, a contrary argument could made: if the fixed capital stock becomes fully owned by investors abroad, then those investors have an increased incentive to prop up the US economy -- they have more to lose by a collapse. If firms based out of the US declare bankruptcy in a crash that can't be good for their foreign investors. In solidarity, Jerry
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