Wednesday, July 24, 2013

Full Disclosure, Self-Criticism (from a confidential source)

From a message to a friend:

To be honest, I'm not all that happy with "Overproduction, Overcapitalization 2." The point I'm trying to make, or trying to account for in the piece is the actual price increases that accompany increased capital formation, the growth of fixed assets, and the increased capital expenditures that precede and accompany periods of  downturns. 

To me, this is not just a question of speculation-- but the purpose speculation serves in distributing the profits.  Certainly there's speculation:  the Financial Times estimated that 70% of all price moves in the commodity markets are the results of computerized trading programs responding to other computerized trading programs-- but such programs are triggered by, and conform with, certain changes in the size of the capitals dedicated to mining, petroleum, etc.

So that's what I want to get at.  I think the price increases are "deliberate" but inherent,  planned but determined,  by the changes in capital formation-- not by speculators, "monopolists"  etc.

I think this might help explain the transition after the end of the "long deflation" in/around 1898 and the movement to syndicates, trusts, where/when prices move much differently than they do in the 1873-1898 period.

Wish I weren't so lazy, and so bored,by "economics."  I might actually be able to tolerate doing the research such a thesis requires.

If I knew of anyone interested, I'd hire him/her to sort it out. 

(author's name withheld by request by the author, S.Artesian)

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