haku: @author Binswanger, M. / yhteensä: 3
viite: 2 / 3
| Tekijä: | Binswanger, M. |
| Otsikko: | Do monetary growth dynamics lead to "profits without production"? |
| Lehti: | Slovenska ekonomska revija
1994 : VOL. 45:6, p. 563-581 |
| Asiasana: | |
| Vapaa asiasana: | finance, financial market, development, economic growth, dynamics, investments, cash flows, profit, money, credit, forecasting, production, capitalist countries |
| Kieli: | eng |
| Tiivistelmä: | The extent of growth in financial markets during the past twenty years has been striking.This article tries to explain, why increasing financial activities are a necessary and inherent part of economic development in modern capitalist economies and not a temporary aberration which might be corrected by policy measures.The main reason are the monetary growth dynamics of modern capitalist economies.Growth is a necessity and not just an option because present wealth is dependent on expectations of future growth.Future cash flows expected of investments are valuated on financial markets (by discounting) where they are transformed into present prices of financial assets.High prices of financial assets are related to profitable investment opportunities which in turn are linked to expectations of future growth.However , the opportunities for profitable investments in physical capital are declining. This has the potential for stopping growth, which would cause a decline of current wealth.But, investments in financial assets which create "profits without production" (without involving investments in physical assets) more and more compensate for the declining growth opportunities of "productive" activities.Therefore, growth expectations increasingly depend on financial activities, which stimulate investments in financial assets, by offering new kinds of profits.This partially explains the dramatic increase of financial activities during the last decades. |
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