From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Mon Oct 09 2006 - 11:59:50 EDT
Thanks Jerry for the reference and I do want to read that book, though it is expensive (libraries don't have it here). I'll try to avoid clogging the list with unsuitable material and exercise better judgement, I just thought Gandall's observations were interesting. I haven't been in contact with Paolo Giussani for ages, wonder what he is doing these days... It's certainly a long way from Das Kapital to the mindboggling, astronomic financial transactions we can see happening these days. Putting it in plain language, I think a paradox in the world economy these days is that there is supposedly a "savings glut", yet also, a massive and growing amount of indebtedness. So you have growing savings, and growing debts, at the same time. Whatever else you might say about it, surely this is a massive misallocation of capital, for which economists ought to be able to give an explanation. Like, who are the real beneficiaries and losers from all this? And I think it's obvious that you can do that only by looking at who has the debt, and who has the savings, and what forms they take. It stands to reason that the people who own all those savings cannot be the same ones that incur all the debts, though there would be a considerable overlap, insofar as the more capital you own, the more you can borrow (ordinary people cannot incur that much debt, simply because they lack the capital collateral for it). But typically, in official discourse, they don't do that; the two issues are disconnected from each other - either they're talking about debt levels, or they are talking about a "savings glut". There is no connection between the two, or else it is a mystery. In a conventional economics textbook story, revenues can be spent or saved. If they are spent, they are consumed, or if they are saved, they are invested (well, unless they are hoarded). Basic accounting idea. A lot of economic controversy then focuses on the economic question of how much to spend, and how much to save, in any given situation, indeed some argue that is precisely what economics is all about. But in reality it doesn't seem to work like that at all, anymore... Jurriaan
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