Wednesday, December 9, 2009


Q: What does capitalism actually do?

A: The first thing that it does, is: that it grows. It creates a larger and larger wealth base. Which circulates; it is traded. Soros finds two sectors. He thinks there is a real economy consisting of real products, and then there is the financial sector. What does the financial sector of a two-part Soros economy do?

A: Easy. It distributes. It finds ways to distribute the growing material wealth base out to the population of a growing nation. As for the material side, it too distributes. Both of the Sorosian sides distribute. The financial sector is different, though. The "f" sector distributes, but, unlike the material sector, it does not produce anything, only distributes.

To review one point, briefly, the wealth base ("it creates a large and larger wealth base...") has to be traded; this is clear because one always produces for customers. If you cannot sell it, you would not produce it. So production and distribution occur hand-in-hand in the physical economy, but the financial sector is different. Which of these two sectors sounds more healthy?

The capitalist world has these two parts: the material part and the financial parts The material part of the two-part Soros economic model both produces and distributes. The financial part only distributes. The financial part must be parasitic on the material part. This is my own view, of course, not Mr. Soros's.

That's today lesson, folks. Next week, we examine "Lords of Finance," which is a book, and ask as to who these guys are. All that I know now is: A book has been written that came out recently on the "Lords of Finance" --- in the depression-era of the 1930's. ... There were apparently three of four of them, one for each major so-called "industrialized country."

No comments: