Tuesday, April 23, 2013

circuit — Are investors seeing the writing on the wall?

In plain English, this translates into:
Firms' Retained Earnings = Investment - Household Savings + Government Deficits + Net Exports

The above equation clearly demonstrates that business profits are positively impacted by government deficits, net exports and private sector investment.* Household net savings, on the other hand, have the effect of reducing firms' retained earnings. Similarly, balanced budgets and government surpluses have either no impact on profits or have the effect of reducing them.
Fictional Reserve Banking
Are investors seeing the writing on the wall?
circuit

1 comment:

paul said...

Sounds familiar…

Actually, profit in the aggregate over time is (in the practical sense) impossible without deficit spending. Failure to capitalize profits will result in a system failure (drastically reduced flow and failure of the banking system).