Paul C.,
I know that you are highly prejudiced about the financial sector's
contribution to society, but here I don't follow your argument at all.
Loaned capital, whether as straightforward bank loans or in the form of
equity and bond issues, can be viewed both as a stock (the volume of
outstanding loan money) or as a flow (the continuous supply of loaned
money). In practice, the ongoing charges on the debt should balance against
the income generated by using the borrowed funds, and if they don't then
there's a crisis. Anybody knows that the financial sector does not just
consume savings unproductively, because, by controlling investments, it
determines not just whether or not production will take place, but also how
it will take place. Certainly, in essence the financial sector is mainly
about mobilizing borrowed funds to extract income. But it cannot very well
do so, without exerting a decisive influence on production as a whole,
reorganizing it so that income can indeed be extracted from it.
Jurriaan
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Received on Sat Nov 7 01:58:50 2009
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