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Well, nothing's stopping investments outside the empire (capital controls have gone out of fashion). This is one reason the rich get richer... Among the people who got the big tax windfalls, those who don't mind a bit of risk invest for high returns in developing nations... Helps the balance of payments in the investor's country. The others buy government bonds. None of this actually benefits their compatriots or the real economy in their country (except marginally through the provision of luxury goods and services).

Your point b is something I have always believed... Club of Rome and all that... It's about time it became fashionable.  

Indeed, it seems intuitively obvious that high rates of return on capital are only possible in a growing economy. So the risk-averse capital is not, in the aggregate, going to get a good rate of return. In the long term, perhaps investors will adjust their expectations to moderate, sustainable returns. In the meantime, with a huge amount of productive capacity idle, we've got a capital strike on our hands.

Government intervention seems the only rational possibility. But that would require rational government.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Aug 18th, 2014 at 06:35:02 AM EST
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eurogreen:
it seems intuitively obvious that high rates of return on capital are only possible in a growing economy

Which leads us to consider the prodigious rise of the financial sector. Which compensates for lack of growth by whipping up high rates of return based on the capture of future flows.

No growth now? Mine the future!

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Aug 18th, 2014 at 07:00:37 AM EST
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This is emphasised by Streeck, who notes the huge growth of the financial sector starting from the 80s (public debt boom) and contin through the 90s and 2000s (private debt boom) -- a real goldrush.

Where now for capital? To the moooon?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Aug 18th, 2014 at 09:02:04 AM EST
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