Re: Keynes Harris Lecture

["William B. Ryan" <william_b_ryan@xxxxxxxxxxx>]

In continuation of
http://csf.colorado.edu/forums/pkt/2000/msg00517.html

Referring to the diagram at
http://www.geocities.com/CapitolHill/Senate/7018/flux-reflux.jpg
which are plots of rates of increasing spending against time.  If t1
is the flux, then t2 is its reflux.  t3 is a lagging accounting curve
arbitrarily defined to delay the expensing of cash disbursements into
production.

Case 1) Ignoring for the moment the existence of a "B" circuit, credit
is extended by banks in the first instance to entrepreneurs, enabling
them to pay increasing salaries, wages and dividends to final
consumers (the "A" circuit).  Entrepreneurs sell to consumers an
increasing production of goods, services and securities.  t1 here
represents the increasing flow of bank money through entrepreneurs to
consumers.  t2 represents the flow of bank money back from consumers
through sales.  Instantaneously measured t1 - t2 represents debt.
Instantaneously measured t2 - t3 represents profit.

Case 2) If, on the other hand, bank credit is extended to consumers in
the first instance as increasing consumer credit, the leading curve t1
represents increasing sales, the lagging t2 represents increasing
entrepreneurial spending, and t3 is again accrued expensing.  Profit
in this case is t1 - t3, apparently much greater than case 1, masking
temporarily the defects of finance capitalism.

Bill Ryan
william_b_ryan@xxxxxxxxxxx
http://www.geocities.com/CapitolHill/Senate/7018
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