Where Profits Come From - The Critical Question Never Asked | David Levy | TEDxElonUniversity
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- Опубликовано: 26 авг 2024
- Macroeconomic forecasting is often thought to be a confusing science. David Levy walks listeners through profit-centered methodology and how the economy shifts.
David A. Levy is chairman of The Jerome Levy Forecasting Center, LLC, a macroeconomic forecasting and consulting firm using an uncommon, profit-centered methodology. He is a widely respected economist, investor, successful hedge fund manager, speaker, author, and former member of various public policy study groups, including a presidential commission. He forecast that the collapse of the housing bubble would cause a broad financial crisis and severe recession-and started a hedge fund in 2004 exclusively to capitalize on the resultant interest rate collapse. Levy graduated Phi Beta Kappa from Williams College with a B.A. in mathematics and has an MBA from Columbia Business School.
This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at ted.com/tedx
Every previous explanation of how profits are achieved, that I ever heard in my 67 years of living on this planet, has been of a far more simplified, far less complete nature. Thank you David for making the picture bigger, and especially for including very real factors that typically get left out, and thereby helping folks like me understand better.
This Minsky ish approach is okay. But the real way to actually fix an economy is not to just identify where profits come from but to make sure make sure all incomes (save welfare for the vulnerable) are actually earned in an economy not extracted from monopoly rent privileges.
Taxation should be focused on economic rents to ensure profits are normal as opposed to supernormal ie long term far more like the perfect competition models in the textbooks. The exponential rise of land values is the biggest issue, these unearned gains sponging off the rest of the productive economy, and fueled by debt are the chief cause of boom bust.
this makes no sense. saying that fixed assets create wealth overlooks the labor required in order to facilitate the creation of wealth. land is a fixed asset, but it can only facilitate the creation of wealth, it doesn’t create it itself.
profit isn’t just a preemptively decided amount either, but he says that profit is part of the wealth fixed assets create. this is obfuscating the reality of the situation
Great talk!
basic , important question .. also, talk is not so bright but qustion is important.
Whilst this does make logical sense, it lacks historical context; it doesn't answer the question where the $1000 or the $1250 came from to begin with?
This is an important question to address because it needs to answer the question - if production and investment in fixed capital grows, how does the money grow along with it?
The answer is lending. The capital assets are typically bought via credit. Lending effectively creates money by duplicating it. Say a bank has $100 and that's all the money in the system. Then it lends $100 to a company. Even though the bank parted with the $100 it gets a loan asset worth exactly $100 in return, so it hasn't lost anything. The company gets a $100 liability, but it now has the money so it's position hasn't changed either. Yet if we count total assets in the system we get $200, double what we had before. Note that net positions have not changed, however the company is able to make a $100 purchase that it couldn't before. In the real world the money could be injected into the system via credit creation anywhere, be it govt loans, business loans, loans overseas or consumer credit, and the laws of accounting make it clear that each financial dollar asset is someone's liability i.e. someone's debt somewhere.
@Mahdi Termos $200 total assets comes from the $100 held by the company plus the $100 loan asset held by the bank. Net assets of course remains at $100 because the company has a $100 liability.
As for your thing about "printing" money, you're overcomplicating things. If you look at the balance sheets of central banks you will see the currency they "print" is accounted for as their liability. So them "printing money" is functionally the same as anyone else borrowing. So the answer remains the same. The money is created through lending and lending alone. And you don't need a central bank to print money to do it, you just need anyone who can borrow.
Government.
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too bad explaining things...
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