Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
... that is, the loanable funds fallacy:
The US now can't sell as much of its product (Treasury securities) as it could, so capital in the US decreases as surely as it would if we were talking about manufactured goods.  As the capital shrinks, the plants start cutting back just as surely as if Farawaystan had slapped a tariff on US products, because none of the plants operates on current accounts.

It conflates plant and equipment (a.k.a. "real capital") ... productive capacity ... with financial obligations. But financial capital is not like plant and equipment in being technically necessary for production, rather it is part of the institutional system for determining control of production.

Its very convenient for the interests of transnational corporations to conflate financial capital with plant and equipment as if the former was part of the requisite resources for production, rather than being part of the current rules of the game for who gets to say how resources are deployed.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jan 13th, 2009 at 12:29:12 PM EST
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