[Pen-l] Re: Thoughts on Fictitious Capital

["Julio Huato" <juliohuato@xxxxxxxxx>]

Sabri,

> What are you talking about Julio? Now, this is information comes from
> "Bad Money" by Kevin Phillips, 2008, and he claims that his
> information comes from Federal Reserve Flow of Funds Accounts of the
> US. If this guy is not a liar, the domestic financial debt as
> percentage of the US GDP  in 2006 was 107%.

I'm talking about "domestic" -- not "national" -- value added.  Where
the holders of the firm are doesn't matter.  It only matters where the
firm is located, basically whether it pays domestic taxes or not.

Also, value added is a *flow* category while debt is a *stock* category.

Finally, value added is calculated by adding up wages, salaries, and
profits of FIRE firms.  You can be an investment banker, helping
China's central bank take over the U.S. Treasury, but the salaries or
profits you make will be U.S. domestic value added, a component of
U.S. GDP.
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