Michael Hudson on How Finance Capital Leads to Debt Servitude « naked capitalism
The original hope of banking and finance capitalism in the 19th
century was that banks would make productive loans to finance industry.
The aim was for banks to do something new, that no economy had done in
the past: make loans not merely to ship and market goods once they were
produced, but to finance new capital investment by manufacturers and
producers, as well as by the public sector to build infrastructure. The
idea was for these investments to create profits out of which to pay the
interest and the principal back to the lenders.
This was defined as productive lending. Nothing like it occurred in
antiquity or in the post-feudal period. Investment always had been
self-financed out of savings
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