May

20

I have the following comment on your post entitled "Where Does Interest Come From?" dated June 1, 2010, and posted at [http://www.dailyspeculations.com/wordpress/?p=4824 ]:

The issue regarding the source of macroeconomic interest (and profits) appears to be unsettled among economists. A free paper on this issue, entitled “What is the Source of Profit and Interest? A Classical Conundrum Reconsidered,” by Gunnar Tomasson and Dirk J. Bezemer, dated January 29, 2010, and posted March 11, 2010, can be found online at https://mpra.ub.uni-muenchen.de/21292/ . Personally, although I have not exhaustively researched this issue or economists’ attempts to address it, of the explanations I have studied, I believe that the monetary-circuit approach of Professor Louis-Philippe Rochon most plausibly resolves the conundrum by considering that, in firms’ investment cycles, a cash outflow required for the purchase of capital goods and financed by long-term bank loans occurs in the first period of production in the investment cycle while long-term bank loans may be paid back over multiple periods of production until the end of the investment cycle.

For a “philosophical take” on this issue, please see my topic entitled “Anti-Realism and Macroeconomic Profits/Interest,” posted April 8, 2016, on the “Philosophy Now” website, https://philosophynow.org/ . The topic can be found under the “General Philosophical Discussion” in the “Philosophy Now” Forum on that website. In the topic, I question objective reality in a manner similar to anti-realism due to the fact that economists still have not settled the issue of where money for macroeconomic interest (and profits) comes from.


Comments

Name

Email

Website

Speak your mind

7 Comments so far

  1. Ed on May 22, 2016 9:04 am

    Interest comes from differences in time preference and accumulated savings/working capital. It is renting money to those with a more immediate need and requires the passage of time.

    Profit is arbitrage between input prices and output prices of a good or service.

    It seems very clear cut to me. I wonder if i’m missing some something, or if the economists have too much time on their hands.

  2. Anatoly Veltman on May 24, 2016 6:49 am

    Yes Ed, you missed the current reality of negative interest rates in all of the leading sovereigns in the Old World

  3. Greg Gorham on July 13, 2019 10:04 pm

    I. The following economics/finance questions, in my opinion, require only common sense, rationality, and a basic understanding of finance and its history in order to attempt to address them:

    1. a. So it took 300-400 years from the dawn of modern accounting and finance, including derivatives, in the 1600s for this world to come up with what Professor Louis-Philippe Rochon did in 2003?
    b. So I may have been the one who introduced Professor Rochon’s view referenced in 1.a. above to the general public in the United States through www.dailyspeculations.com and a couple other websites while I ALSO have all those coincidences listed at www.understandinguncertainty.org and www.improbability-principle.com?
    2. In light of 30-year mortgages of individual homeowners, what theoretically is the rate of return for an apartment complex after year 40?

    II. How are acquaintances in my past and parapsychology organizations coming with the coincidences in my life listed at www.understandinguncertainty.org and www.improbability-principle.com?

    1. “interesting, and by no means absurd”- the late Albert Einstein (discussing coincidences and the idea of seriality).
    2. “YOU ON TO SOMETHING BUT I CAN’T TELL WHAT THAT IS.”- Professor Bernard D. Beitman (4/12/2109) (discussing my coincidences and perhaps other matters); “Very interesting”- Professor Bernard D. Beitman (7/13/2019) (discussing my coincidences and perhaps other matters).
    3. “interesting that you keep finding these connections”- Professor Sir David Spiegelhalter (6/14/2019) (discussing my coincidences listed at www.understandinguncertainty.org).
    4. Why is it Professor David J. Hand appears to have posted over the last several months only my coincidences listed at www.improbability-principle.com?
    5. “interesting”- Professor Michael Shermer (2018) (discussing certain coincidences of mine).
    6. “mystery”- Professor Freeman Dyson (2018) (discussing certain coincidences of mine).
    7. As a comment, are I. above and II. here somehow related?- me (7/13/2019).

  4. Greg Gorham on July 13, 2019 10:12 pm

    Here’s my email in the event someone needs to contact me. Sorry I forgot to put my email in my comment a short while ago.

  5. Greg Gorham on May 4, 2020 12:33 pm

    I would like to revise my above comment regarding the hypothetical rate of return for an apartment complex to read the following: “In light of 30-year mortgages of individual homeowners, what theoretically should be the rate of return for an apartment complex after year 50? Still another conundrum? (Why choose year 50? 1. Assume 30 years needed to pay off ‘mortgage’ loan. 2. Assume 10 years total needed to recoup salaries of property management. 3. Assume another 10 years total needed to cover cost of capital. So, 30 + 10 + 10 = 50.)”

  6. Greg Gorham on December 14, 2022 6:15 pm

    Please delete/disregard my above comment on May 4, 2020. I failed to take into account property taxes. Thank you.

  7. Greg Gorham on September 21, 2024 8:50 am

    On second (or third) thought, for purposes of the rate of return for an apartment complex, also assume an increase in the market value of the apartment complex is equal to the cost of property taxes plus the cost of maintenance. Still a conundrum after year 50?

Archives

Resources & Links

Search