Dr. Keynes Was Right

It's the Distribution, Stupid
APRIL 23, 2012 2:35PM

Reality Bites

Rate: 1 Flag

By now it should be clear that The Great Recession was caused, at its heart, by folks attempting to gain money for nothing.  As this endeavor has said many times:  investment, real physical investment, is the process of savers giving, for a fee called interest, their money to borrowers, who then use that money to make more widgets for the same amount of effort or the same widgets for less effort.  It's this effort delta that funds the interest payment.  ***All other forms of interest paying are just robbing Peter to pay Paul.***  Housing, whether single family or tenements, is merely serial consumption, and the interest payment is funded by either increasing nominal household income or decreasing spending on other household items.  There is no productivity increase to fund the interest payment, since there is nothing produced (at least, for sale; some economists invoke psychological arguments to define an increase in experienced utility from a McMansion, for example, but such a response doesn't fund the interest payment).

It should come as no surprise that this Forbes article (and Forbes is a business publication, isn't it?) is more than a bit scary.  The foxes are watching the henhouse, yet again.  Enjoy.

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Newer forms of financial masturbation.
Yeah, except it's us, not them, who end up with all that sticky stuff in our mouths.
Read the Fortune article you linked to -- and was sidetracked by several other pieces by the author. But to return -- sort of -- to the subject at hand, the dizzying "valuations" of companies like Facebook and Instagram, et al, boggle the mind. But they also ought to be a warning -- just as people paying real hard-earned (hopefully) cash for virtual tractors and the like ought to serve as a warning that our priorities and values are recklessly -- and as appears more and more obvious, hopelessly -- out of line.

I selfishly hope I'm gone before these chickens come home to roost, but alas, my 24 year-old son isn't certain to suffer the consequences. Indeed, as a video gameholic, he already suffers the symptoms of this epidemic disease I think I shall call virtuosis.