Re: Money stocks and interest flows (was: James A. Baker III)

["Gunnar Tomasson" <tomasson@xxxxxxxx>]

Alan:

Here is another Schumpeter quote:

"Böhm-Bawerk was indeed the first who expressly said that the whole value of
the product must IN PRINCIPLE be divided between labor and land, if the
process of production is to proceed with ideal perfection."

Whence it follows that, under ideal conditions, the PRODUCTION process
cannot in principle yield a surplus over and above the factor income shares
of suppliers of "land and labor".

Whence it follows further that, insofar as PRODUCTION CREDIT is concerned,
INTEREST thereon MUST derive from a source outside the production process
itself - i.e., NON-production related credit creation.

Gunnar

----- Original Message -----
From: "Alan G. Isaac" <aisaac@xxxxxxxxxxxx>
To: "POST KEYNESIAN THOUGHT" <pkt@xxxxxxxxxxxxxxxx>
Sent: Friday, December 22, 2000 12:28 AM
Subject: Money stocks and interest flows (was: James A. Baker III)


> On Thu, 21 Dec 2000, Gunnar Tomasson wrote:
> > Given
> > (a) outstanding credit (money supply) of 100, and
> > (b) loan interest rate of 10% per loan period, then
> > (c) end-period repayment of principal and interest will total 100 + 10 =
> > 110.
>
> > Absent NEW credit to the original debtor(s) in the amount of 10, accrued
> > interest CANNOT be paid.
>
>
> While this story may suggest it is unwise for a person
> to borrow in the absence of anticipated income,
> it tells us nothing about monetary economies
> (where the money STOCK has no necessary relationship
> to income FLOWS).
>
> Alan Isaac
>
>
>
>
>