Money, Capital, and Wealth, how it affects America.

 Money, Capital and Wealth, how it affects America.


“water, water everywhere and not a drop to drink” , in Samuel Taylor Coleridge’s poem, ‘The Rime of the Ancient Mariner’.


That is the story of US, ever since secondary capital markets took over the American economy, a wealthy country which is scarce in capital.


An example for the hypothesis is pretty evident from the investment decisions in the news item below. 


A foreign company is setting up a factory in US, for a power source for future, using technology developed by an Israeli company. The foreign company is using funds from US government program to set up a factory in US.


The Israeli company is collaborating with Bank of America to scale up the production of its technology that can speed up the output of solar cells.


The example shown above, how amidst the abundance of wealth it is difficult to find capital, for projects critical to America’s future. That is the nature of wealth it seeks the path where it can get high returns. We Over the last 40 years wealth flows collectively into assets that most believe

that are likely to offer high returns, secondary capital markets, real estate, and precious metals to name a few.


Very little portion of American wealth flows, as capital, if at all to create productive assets, especially industrial assets. Benchmarks set for wealth to become Industrial capital are very high. It has to flow through intermediaries, banks, investment bankers, venture capitalists etc.. who make it difficult for non favored industries to get capital, whereas favored industries by these intermediaries like software, tech, and biotech even with high mortality rates are likely to get shovelful of capital, because of expected returns are high, which is pre requisite for wealth to turn into capital


Money, Wealth, and Capital are the popular forms of currency. Money is the ready to spend currency which most of the population possess, and most volatile, which is mostly spent, and partially saved. Part of the money spent becomes wealth as profit. Wealth when it is spent meet needs at various levels becomes money for a brief period. The wealth to money to wealth cycle is dynamic. 


In US when wealth enters secondary capital market seeking return, it has reduced innovation, competitiveness, or even decimation of many industries in US. Automobiles, Consumer Electronics, Mobile Communications, and battered Boeing are some examples.


My own city of Cleveland which was built by industrial capital, was decimated by wealth, which required shifting of industries to low cost centers, severe cost cutting to boost bottom lines etc.


Ever since emergence of East Asian competition first with Japan, then South Korea, and now China, with thinly veiled stated funding, and non tariff barriers against US exports those markets, the US response driven by secondary capital markets(return expectation of wealth) have been to withdraw or scale down from multiple industries.


Even to develop industrial base in critical industries of the future, US has to depend on foreign companies to put up plants, because of tremendous deskilling that has taken place in many industries, and general lack of interest in industries that have been starved of capital for years, in a country that is plenty in wealth.


So, the future challenge is not taxing wealth, transforming some wealth into capital that aligns with national priorities







https://wallstreetjournal-ny.newsmemory.com/?publink=2d3ff202e_134d2b7h

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