Originally Posted by
Mike Alexander '59
Originally Posted by
Justin '77
Originally Posted by
Mike Alexander '59
Originally Posted by
Justin '77
Consider it a "correction"; be aware that it is a direct consequence of rampant real capital consumption over the past decades.
Could you expand on this concept of real capital consumption? I see no evidence of a decline in capital stock.
:lol: Of
course you don't! That's the whole
point of the Fed "holding down" interest rates -- to disguise the loss of capital (presumably until more can be formed to fill the gap).
Beautiful!
You didn't explain what you mean by real capital consumption.
The following are examples of real capital consumption:
- The thousands of miles of dark fiber optic line in the ground. Even if those lines are someday put to use, the capital expended in putting them up now is unavailable for present use anywhere, and the amount of value they lose (via rot, obsolescence, maintenance, etc) is value gone forever -- since it never provided more than a 0% return.
- The manufacture of cruise missiles. These things are completely obliterated at the end of their life cycle (along with other capital investments). During their life cycle, they produce no capital returns (and, in fact, require maintenance and transport -- which themselves drain capital stocks).
In both cases, the capital consumed consisted
at least of the materials used in the manufacture of either product, the resources expended to keep alive the people who worked on them, and the accellerated wear on the machinery used to make the products. These things were expended to no future return. Thus, the capital, once had, has been consumed.