Re: [OPE-L] Crashes, adjustment, and the long-run

[Paul Cockshott <wpc@xxxxxxxxxxxxx>]

The suggestion that I am making is that a source of the inflow of funds

into the US is capital acquisitions. When the stock of capital for

acquisition becomes constrained, then the inflow of funds

would also tend to fall.

 

Private equity investors act in their own interests, they are not

concerned with propping up the dollar. In this they differ perhaps

from the Bank of China.

 

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From: OPE-L [mailto:OPE-L@xxxxxxxxxxxxxxxx] On Behalf Of Jerry Levy
Sent: 21 March 2006 13:16
To: OPE-L@xxxxxxxxxxxxxxxx
Subject: Re: [OPE-L] Crashes, adjustment, and the long-run

 

Hi Paul C,

 

> To answer with another question:

> How many years would it take at the current rate of deficit

> for the entire fixed capital stock of the USA to pass into the

> hands of overseas investors?

 

I assume you mean 'at the current rate of change'? 

 

> Would this point not act as a limit?

 

Why?

 

The issue isn't how long it would take for the fixed capital

stock to become fully owned abroad. The issue is, if you

are projecting a crash in the long-run, how long is the

long-run? 

 

Also, I don't see any reason to necessarily believe that

foreign ownership of the fixed capital stock in the US would

cause a crash in the US.  Indeed, a contrary argument could

made: if the fixed capital stock becomes fully owned by

investors abroad, then those investors have an increased

incentive to prop up the US economy -- they have more to

lose by a collapse.  If firms based out of the US declare

bankruptcy in a crash that can't be good for their foreign

investors.

 

In solidarity, Jerry

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