Friday, June 21, 2013

Merijn Knibbe on land rent and financial rent.

Paul Krugman is tinkering with a model which explains monopoly rents on products with ‘zero’ or at least very low production costs (pharmaceutical products, computer programs like Excel). But he does not yet mention that (A) electronic fiat money is the ultimate zero production costs product while (B) the seigniorage interest profits made by the banks which produce it are to quite some extent based upon ‘land’related loans. Think of a loan for house purchase, financed by freshly produced money and a 4% interest rate. This income often is, to the extent that it’s used to buy already existing land with a high location value or leads to an inflationary increase of house prices, an often overlooked rent income.
Real-World Economics Review Blog
Links and fests (4 pics)
Merijn Knibbe


1 comment:

F. Beard said...

But he does not yet mention that (A) electronic fiat money is the ultimate zero production costs product while (B) the seigniorage interest profits made by the banks which produce it are to quite some extent based upon ‘land’related loans. Merijn Knibbe

Let Krugman attack the banking cartel and I'll take him a lot more seriously. Surely he is well enough established to speak the truth? If not now, then when?