Sunday, February 27, 2011

Real capitalism versus 'debtalism'

Agree 100%. Real capitalism.. the successfl kind is what Germany is doing. Gradual but relentless build up of industrial capital. You take out bank credit to expand productive capital, then use that capital to pay off the loans. Over time you get a whole fleet of capital plants.

And re-investing profits into more capital plant and capital in the form of research and development.

What I see in the US And UK is what I call 'debtalism'. Loading every company and person's balance sheets up with debt. So more and more of the revenues are going to simply pay interest on debt. And making it a ponzi by inflating asset prices with all this debt, so on paper there is a lot of 'capital'.

One path is the virtuous path to wealth. It takes a lot of hard work and a lot of time to build up. One is the get-rich-quick plan. Flip-this-house is a lot easier than build this house.

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