On Aug 9, 2011, at 5:30 PM, Carrol Cox wrote:
> A invests in "fiance" -- by buying some kind of aper from somebody (B). Now B has the monmey. She does something with it, which puts it in the hands of C. C (bank, individual, corp, whatever) then does something with it.
>
> Can someone suggest stopping points in the sort of pointless circle? Or make it intelligible to a non-economist?
If the money gets deposited in a bank, it could get lent to any number of real-world entities. Barbara Garson did a book, Money Makes the World Go Round, that "tracks" what happens to her advance. She deposited half in a small bank and half in a mutual fund. Obviously there's no meaningful way she could track her personal dollars, but she did follow where the institutions put their money. She chose a small bank in upstate New York, which lends heavily to the interbank (fed funds) market, which means that some of it found its way to Chase. Chase was a major lender to an oil refinery in Indonesia, I think, so she traveled to Indonesia to see the thing she "funded."
I don't remember what happened to the mutual fund - I think it got involved in some takeover engineering or something. But some of that money would find its way into the pockets of money managers, who buy Hamptons real estate and Jaguars with the cash, and employ nannies and gardeners. So that's another entry into the circuits of the "real."
Doug