Real Capital Is A Resource And So Is Money Considered
Real Capital Is A Resource And So Is Money Called
Real Capital Is A Resource And So Is Money Made
Real Capital Is A Resource And So Is Money Used

By Jed Chancey

Much confusion in economics results from the common practice of referring to money as capital. In fact money and capital are two different things. Capital is the real resources that producers use in order to make the goods that we all consume: things like factories, machine tools, trucks, and roads. All capital exists in a specific form. Money on the other hand is non-specific; it can be used to buy anything that is available in the marketplace, including capital goods. This is what leads to the common practice of referring to money as capital. Keynesian economists say that new money cannot cause inflation or other problems because the economy is not at “full employment” or that we have “excess capacity.” I have dealt with the question of “full employment” elsewhere; this article intends to address the issue of “excess capacity.”

In a nutshell “excess capacity” cannot exist because capital goods are specific, they can be used only to engage in a certain type of production. In order to use new money to produce the goods that will be demanded in the future, existing capital must be transformed or new capital goods must be produced. All of this takes time.

The means to acquire goods and services, especially in a non-barter system. (countable) A city designated as a legislative seat by the government or some other authority, often the city in which the government is located; otherwise the most important city within a country or a subdivision of it., title= The new masters and commanders, passage. Money is not capital as economists define capital because it is not a productive resource. While money can be used to buy capital, it is the capital good (things such as machinery and tools) that is used to produce goods and services.

The basic error that occurs as a result of this process is the idea that by adding money to the economy, we can increase current consumption while at the same time setting aside more resources as capital goods to be used to produce for the future. The critical factor that this assumption leaves out is time. It takes time for a given sum of money to enter the market and transform into actual capital goods that can be used for future production. At the time the money is added to the economy, a set amount of capital exists. Increasing the money supply does not increase this amount, it simply allows those who have access to the new money to buy up some of the existing resources and use them. What they use them for depends entirely on who gets the new money first.

In our current system, new money is given to big banks and Wall Street firms. These firms then lend the money to entrepreneurs who actually produce the goods that we consume. Even if the recipient of newly printed money knows of a factory that is not being used, or other “excess” capital, he must still go onto the market and buy that resource, find people who know how to work with the machines in the factory (or train them), and find a market for the products that his factory will produce. These are all risky endeavors. Entrepreneurs evaluate risk based on the interest rate.

When new money forces interest rates down near zero, more risky investments are tried. Projects that are started at a time of loose money and low interest rates tend to fail once the central bank stops printing money and interest rates rise, making things that seemed profitable at the old rates now appear to be losers. These marginal investments that are only possible due to manipulated interest rates are what are known as “mal-investments.” It is the failure of these mal-investments which leads to the sudden business failures at the beginning of every depression or recession. Every boom-bust cycle follows this pattern: new money is printed, interest rates fall, marginal investments are made, the amount of money printing declines, interest rates rise, mal-investments are exposed, people lose their jobs and investors lose money. The loss of jobs and money causes supply and demand to fall, initiating another recession.

The attribution of the recession to a “fall in demand” misses the point. Demand is a result of production and wealth generation. People can only demand consumer goods if they have first produced something which they can offer in exchange for the products that they demand. Attempting to stimulate demand by printing money and lowering interest rates can only lead to a repeat of the boom-bust cycle and to more mal-investments that will eventually have to be liquidated, causing a repeat of the entire process.

Which of the following is an example of a capital resource?
2,900 results
History Please Help
What type of resource were enslaved people in the plantation economy? A.Capital Resource B.Human Resource C.Natural Resource D.Financial Resource I thinks it’s D. Can someone help please.

asked by Philisnotonfire on December 8, 2016
SS
Banks most help grow the economy because __. a. they provide loans for consumers and investors. b. they are difficult to steal from. c. they are backed by the federal government. d. they offer both checking and savings accounts. A Labor unions

asked by Anonymous on September 26, 2013
Science HELP Please
The following facts are true about Resource A: It grows in nature and takes about five years to reach a mature size. It can be replanted after it is cut down. Resource A is most likely a(n) A inexhaustible resource. B nonrenewable resource. C recycled

asked by Annaleigh on May 27, 2016
Science
The following facts are true about Resource A: It grows in nature and takes about five years to reach a mature size. (that’s a tree) It can be replanted after it is cut down. Resource A is most likely a(n) A Inexhaustible resource B Nonrenewable resource C

asked by Cashmere<3 on March 7, 2019
Social Studies
Can you give me an example of a human resource? I know what natural resources and capital resources are. Would a human resource be an occupation like farmer or police officer? We’re supposed to list examples.

asked by Ben on August 25, 2008

Macroeconomics(PLEASE HELP)

Techniques of Production Resource Resource Prices Land $4 Labor $2 Capital $5 Entrepreneurial Ability $3 Possible ProductionTechniques I II III IV 4 6 8 9 6 7 9 9 5 4 3 2 1 1 1 2 a. Which technique is the most efficient? b. If the most efficient

asked by Jen on May 5, 2017
social studies
which of these is an example of a capital resource

asked by Anonymous on September 12, 2018
College microeconomics
Need some help with these questions….Thanks in advanced. All profit-maximizing firms hire inputs up to the point where: A) MRP = W B) MR = MC C) MP = W D) MFC = MRP E) MFR = MRC 4) A firm’s marginal revenue product of labor curve A) is steeper than its

asked by sue on April 14, 2009
business
which of the examples is not a resource land firms labor machinery or human capital

asked by kussigak on September 18, 2014
Social Studies/Economics
Which of these is an example of a capital resource? A. Workers B. iron ore (my answer) C. entrepreneurs D. computers

asked by asdfqwerty on November 14, 2018
Geography
Which statements describe the management of the earth’s resources? Resource management becomes more important as the population increases. Resource management is a global issue. Resource management is a local issue. Resource management is a national issue.

asked by george on December 15, 2009
geography
Which statements describe the management of the earth’s resources? 1)Resource management becomes more important as the population increases 2)Resource management is a global issue. 3)Resource management is a local issue. 4)Resource management is a national

asked by george on January 11, 2010
social studies
Geothermal is considered a ? 1)fossil fuel 2)renewable resource 3)nonrenewable resource 4)recyclable resource I think #2 Thanks

asked by Jamie on January 3, 2018
social studies
define in details the term human resource and why might people be considered a country most valuable resource and what suggestion can be offered to control and develop this resource to the fullest

asked by joel thomas on February 7, 2010
s.s.
what is meant by “people as resorce” ?explain how is human resource diffrent from other resorc

Real Capital Is A Resource And So Is Money