"Better times" cannot sustain stock prices

David Lloyd-Jones dlj at pobox.com
Sun May 3 14:14:34 PDT 1998


Patrick Bond, a delicious name for a professor of finance :-), writes:


> As overaccumulation begins to set in, as structural
> bottlenecks emerge, and as profit rates fall in the
> productive sectors of an economy, capitalists begin to
> shift their investable funds out of reinvestment in
> plant, equipment and labour power, and instead seek
> refuge in financial assets.

I don't get it. For "financial assets" to be a "refuge," money has to be squirrelled away in them, but this doesn't happen with money spent on stocks. For every buyer there's a seller. Every time somebody puts money into one of these "refuges" somebody else is taking the same amount out, either as a seller or as a broker. Net refuge: zero.

Fraternally,

-dlj.



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