Lord Keynes — A Quick Point about Bill Mitchell’s Views on Speculative Capital Movements

Lord Keynes takes issue with Bill Mitchell over BOP constraints.

Social Democracy For The 21St Century: A Post Keynesian Perspective
A Quick Point about Bill Mitchell’s Views on Speculative Capital Movements
Lord Keynes

Izabella Kaminska — Property bubbles and ghost cities

I have a working theory about the premium property bubble in capital cities like London. There’ll be a post about it on AV soon. (Have been a little under the weather so it’s taken a while.)
In a nutshell, the idea is that the economy is plagued by a glut of misvalued capital — which is seeking preservation for as long as possible and at all costs. The preservation is not really about the dollar sum of that capital, but about preserving the position on the social hierarchy ladder that it provides for....


But, as per my German sun lounger analogy, owners of abstracted financial capital have lost perspective on what their capital rights represents. They wish to preserve not the wealth provided for by the means of production, but the superior social position that this used to entitle them to.
The truth, however, is that they are no longer entitled to that. Also, what they misunderstand is that they are no less well off as a result of losing that claim. It’s everyone else who is elevating to their wealth.
Nevertheless the search for the preservation of their past superiority continues — the days when they were adding social value — continues.
Consequently this capital flitters from one idle asset class to the next, avoiding at any cost an opportunity to invest in something productive — out of fear this might expose them to the sort of risk that might lose them their superiority claims forever. It’s worth noting that the constant speculative flittering is damaging in its own right.

Dizzynomics
Property bubbles and ghost cities
Izabella Kaminska

In a healthy capitalism, the purpose of real capital is production for consumption and financial capital is for further capital formation from gains from production, that is, for productive investment. When financial capital is accumulated as financial wealth for it own sake, neither for consumption not productive investment, rentierism and power, then capitalism becomes dysfunctional.

Philip Pilkington: Monetary Policy and Metaphysics – How Economists Try to Naturalise Terrible Policies and Disappear Into Their Own Theories

Yves here. Philip Pilkington makes an interesting argument in this post, namely, that the method preferred among mainstream economists for managing the economy encourages investors to speculate in financial instruments rather than invest in real economy assets and projects.

Naked Capitalism
Monetary Policy and Metaphysics – How Economists Try to Naturalise Terrible Policies and Disappear Into Their Own Theories
Philip Pilkington

Rent-seeking has begun to replace productive contribution as the driver of GDP as shown by the increasing share of the financial sector and the declining share of manufacturing and industry. As Michael Hudson would say, finance capital is replacing productive capital.