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The Role of Capital Investment in Creating Prosperity

What is the role of capital investment in creating prosperity? Part 3
https://www.youtube.com/watch?v=jV3D3JK5Ki4

http://youtu.be/jV3D3JK5Ki4



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Loads of falsehoods

http://www.youtube.com/watch?v=HbJjexY0Yu4

Relatively new?

The First Bank of the United States is relatively new compared to the same old central banking scam run in the time of Jesus, and Jesus is relatively new too.

If anyone cares to understand the effect of criminal central banking fraud, then a count of all the murdered people ought to lend a helping hand, again, if the idea is to understand, rather than add to the falsehood, just keep the accounting as accurately as possible.

Here is an accurate accounting:

http://praxeology.net/BT-SSA.htm

quote____________________________________
First in the importance of its evil influence they considered the money monopoly, which consists of the privilege given by the government to certain individuals, or to individuals holding certain kinds of property, of issuing the circulating medium, a privilege which is now enforced in this country by a national tax of ten per cent., upon all other persons who attempt to furnish a circulating medium, and by State laws making it a criminal offense to issue notes as currency. It is claimed that the holders of this privilege control the rate of interest, the rate of rent of houses and buildings, and the prices of goods, – the first directly, and the second and third indirectly. For, say Proudhon and Warren, if the business of banking were made free to all, more and more persons would enter into it until the competition should become sharp enough to reduce the price of lending money to the labor cost, which statistics show to be less than three-fourths of once per cent. In that case the thousands of people who are now deterred from going into business by the ruinously high rates which they must pay for capital with which to start and carry on business will find their difficulties removed. If they have property which they do not desire to convert into money by sale, a bank will take it as collateral for a loan of a certain proportion of its market value at less than one per cent. discount. If they have no property, but are industrious, honest, and capable, they will generally be able to get their individual notes endorsed by a sufficient number of known and solvent parties; and on such business paper they will be able to get a loan at a bank on similarly favorable terms. Thus interest will fall at a blow. The banks will really not be lending capital at all, but will be doing business on the capital of their customers, the business consisting in an exchange of the known and widely available credits of the banks for the unknown and unavailable, but equality good, credits of the customers and a charge therefor of less than one per cent., not as interest for the use of capital, but as pay for the labor of running the banks. This facility of acquiring capital will give an unheard of impetus to business, and consequently create an unprecedented demand for labor, – a demand which will always be in excess of the supply, directly to the contrary of the present condition of the labor market. Then will be seen an exemplification of the words of Richard Cobden that, when two laborers are after one employer, wages fall, but when two employers are after one laborer, wages rise. Labor will then be in a position to dictate its wages, and will thus secure its natural wage, its entire product. Thus the same blow that strikes interest down will send wages up. But this is not all. Down will go profits also. For merchants, instead of buying at high prices on credit, will borrow money of the banks at less than one per cent., buy at low prices for cash, and correspondingly reduce the prices of their goods to their customers. And with the rest will go house-rent. For no one who can borrow capital at one per cent. with which to build a house of his own will consent to pay rent to a landlord at a higher rate than that. Such is the vast claim made by Proudhon and Warren as to the results of the simple abolition of the money monopoly.
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The reason why that works so well as an accurate accounting is summed up here:

"This facility of acquiring capital will give an unheard of impetus to business, and consequently create an unprecedented demand for labor, – a demand which will always be in excess of the supply, directly to the contrary of the present condition of the labor market. Then will be seen an exemplification of the words of Richard Cobden that, when two laborers are after one employer, wages fall, but when two employers are after one laborer, wages rise. Labor will then be in a position to dictate its wages, and will thus secure its natural wage, its entire product. Thus the same blow that strikes interest down will send wages up."

Neither the Involuntary Socialists (a.k.a. criminals due to their involuntary nature, a.k.a. criminal nature) nor the Involuntary Capitalists (same criminal nature) will touch those words with a 10 foot pole because then their whole interest/labor scam is confessed as they fumble with their lies, threats, and whatnot, were they to dare and actually answer the accurate account.

They won't, because they can't, and the accurate account speaks for itself.

End the money monopoly fraud business, and the workers working in labor are as powerful as the workers working in any other enterprise.

Power produced into oversupply reduces the price of power while purchasing power increases because power reduces the cost of production.

Joe

Let me just add

There are only three forms of capital. Human capital (labor), natural resources (land, mines, minerals, oil, trees etc.) and capital formation. Capital formation is NOT money. Capital formation is the productive resource of pervious profits invested in assets that make the firm more profitable….which in an economy of indirect exchange becomes money. Think of it this way…..roads. Before roads were developed most of the good were transported by trains or canals, once roads came along more good could go to so many more places. So the money that was invested in the roads was the profits from some other source…..but the return on investment of building the roads provided the greatest opportunity of return. Once so many roads were built that they weren’t used the return dropped and roads were not built as much. This is the essence of capitalism…..the opportunity cost of capital.

Wealth is not an increase in GDP….wealth is built when you take the three forms of capital and combine them for a return greater than the input. Every capital project considered goes through a process where the project’s expected return are in excess of the contributions or the project will be refused…..not just profitable by accounting standards but profitable by economic standard( economic value added). EVA subjects the decision to; is this the best use of the capital or is there a better opportunity. The zero interest rate policy distorts the calculation of EVA and cause malinvestment, which is what the man said when he said that the “investment looks good under zero interest rates but what does it look like under normal interest rate policy….this is what the CEOs face today. That’s why so many companies are sitting on so much cash right now and no one understands it, except the CEOs, but that a different discussion.

Jan Helfeld's picture

Thank you for your comment.

Thank you for your comment.

Jan Helfeld

Great interview

Bump.

Jan Helfeld's picture

Thank you for your support and BUMP

Thank you for your support and BUMP.

Jan Helfeld

Jan Helfeld's picture

Is capital invested per worker the key metric ?

Is capital invested per worker the key metric to determine productivity and wealth?

Jan Helfeld

Jan Helfeld's picture

THE ROLE OF CAPITAL INVESTMENT IN AN ECONOMY

THE ROLE OF CAPITAL INVESTMENT IN AN ECONOMY - see Part 2 & 3 Fred Smith interview.

Jan Helfeld