It comes from believing that money as such plays no fundamental role in the economy, but is only a veil covering trade in reals.

Perversely, without an ability to model stable macroeconomic levels of output below full employment, financial saving, receiving money incomes and not consuming them, is automatically freeing resources that will then be used in real investment.

With that automagic equation between monetary saving and real investment in place, its a short step to acting as if financial "investment" is identical to real investment.

These are all empirical fallacies that macroeconomists understood quite well after WWII ... there is no automatic tendency toward full employment, there is no automatic association between creation and trading of financial assets and actual investment in productive capacity ... but for decades now, mastery of the marginalist microeconomics at every greater levels of sophistication has been required to become a professional economist, while mastery of the rudiments of actual Keynesian economics has been entirely optional in ever more schools, and in the last two or three decades often entirely unavailable in the grad school curriculum.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.