» Fri Feb 18, 2011 8:07 pm I would agree that Capitalism has some flaws, but that certainly does not make it a failure. The rise in the financial sector does have its benefits, companies that accomplish breakthroughs in technology are able to receive funding at faster rates so they can invest more in their products. Granted, it opens up the possibility of crashes if a bubble is formed, but allowin' for successful businesses to expand is beneficial for many people. I have not read the book, but as a rule I make a point to stay away from anything Marx related.
Japan's stagflation was not caused by capitalism but rather excess amounts of Keynesian economics.
Japan's stagflation was not caused by capitalism but rather excess amounts of Keynesian economics.
The rise in the financial sector should follow productive's economy growth. This excessive growth and importance it has on the economy just shows how are CEOs' prospects of economy: they aren't putting their capital in real investment, rather they're putting it in speculative investment (which is not productive). This can also be seen on cash reserves companies have, and this is also discussed in the book I pointed out. Check it out: http://www.tradersnarrative.com/wp-content/uploads/2010/06/corporate%20cash%20hoard%20record%20Jun%202010.png Do you notice it started to rise much faster since the 80s (and is rising at a ridiculous rate now)? That's when the financial sector started its great growth too. That's when investment started to go much more towards financial assets, rather than productive assets.
Yes companies can get loans with lower rates and more easily, but that doesn't change the fact that capital is not going towards the productive economy.
Just a correction, Japan isn't on stagflation (stagnation + inflation), it's on economic stagnation and tends to go to deflation, which is also a dangerous situation.
I'm not sure what you mean about excessive Keynesian economics... Too much markets' deregulation? If so, that's right. Government has to intervene on the markets in order for the economy to grow. Adam Smith's invisible hand only exists in perfect concorrency, but advanced capitalist economies are monopolistic.
About the US dollar, well Bernanke isn't very smart. He's a monetarist, he thinks everything in the economy can be resolved from a monetary perspective. He gave a great speech of how the US economy was booming, and as such real estate was healthily growing, just before the real estate market crashed and economy sinked.
