Re: [OPE] Bezemer articles

The point is that the industrial and commercial sector taken as a whole
has a financial surplus so
the financial sector does not channel funds into the rest of the firms.
Instead it channels funds
partly towards the state, but in addition it absorbs savings via pension
schemes. If the industrial
and commercial sector is itself running a surplus, these savings can not
end up in real investment
so where do they go?
There are 3 possible unproductive sinks:
1. The expenditures of the banking system itself
2. Going to finance state budget deficits
3. Going to finance personal consumer credit.

Jurriaan Bendien wrote:
> 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 14:02:56 2009