Re: two currencies and Korean war-- and M-C-M'

["Kazuhiro Kurose" <kurose@xxxxxxxxxxxxxxxxxxxxxx>]

William

> The expansion is financed through bank credit, not
> savings or retained earnings for the economy as a
> whole.  That is how it has been for the better part of
> four hundred years.  Individual firms, of course, may
> finance their individual expansion from retained
> earnings, as well as the personal savings of their
> proprietors.  It is not possible for the firms sector
> as a whole to do so.

I understand that bank credit created ex nihilo is required in the expanding
economy. But, as you said, some entreprenuers surely finance their expansion
from retained earnings. It means that some finance their expansion from past
saving. So I think that though bank credit created ex nihilo is
indispensable from the macroeconomic perspective, it doesn't mean that all
of the expansion is financed by the bank credit.
I have not been fully convinced the argument by some of endogenous money
theorists that nothing is financed by saving, irrespective of whether or not
the economy is expanding. According to them, even Davidson is too
"mainstream" to be called "post Keynesian". What do you think?

This is additional question.
> Receipts from loans do not count as "income" and the
> repayment of principal does not count as "expense."

The payment of interest is included in Natinal Income, GDP or GNP. But the
repayment of principal is not included in "expense", so it isn't also
included in Natinal income, is it?

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  Kazuhiro Kurose
  Graduate School of Economics and Business
  Administration, Hokkaido University
  Kita 9 Nishi 7, Kita-Ku, Sapporo, Japan
  060-0809
    TEL: +81-11-716-2111 ex:2786
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