[quote=briansd1][quote=CA renter]
There is always a certain amount of money flowing through the economy at any given point in time. I would like to see more of that money going to the productive workers, rather than the “capitalists,” because the workers are the ones who enable that money to exist in the first place.[/quote]
Theoretically, the financial system is an efficient way of allocating capital to productive uses. For that service, they get a return.
The problem now is that the banks are the friction within our economic system.[/quote]
Lots of things can happen “theoretically,” but what happens in real life is what matters most of all.
If capital were being allocated to productive uses, that would be wonderful. Unfortunately, much of the “productive” sort of investing has gone by the wayside, and the “speculative” sort of investing has taken its place.
A productive allocation of resources would include direct investments in companies that provide goods and services demanded or desired by willing and able buyers. Productive investments increase, maintain, or make productive capacity more efficient. It increases the supply of goods and services desired by the market.
An unproductive allocation of resources would include buying up existing assets when one has no need or use for these goods — buying them only because they anticipate selling them for more money at a later time (capital gains, for the most part), or because they want to collect rents/fees from those who actually need these goods. Instead of producing goods and services desired by the market, this type of “investing” takes goods OUT of the market, making items scarce when they are most needed and desired. This type of investing DECREASES the supply of goods and services. It does NOTHING to make anyone or anything more productive. This type of “investing” does not grow an economy, and is zero-sum. It sends false supply/demand signals to the market and creates price booms and busts that cause tremendous damage to an economy, and to society in general.
Because of tax policies, Federal Reserve manipulation, and the suppressed demand caused by the offshoring of U.S. jobs and excess debt, we have encouraged this type of completely unproductive and damaging speculation. I would like to see a reversal of this trend.
