[Note: This item comes from friend David Rosenthal. DLH]
From: “David S. H. Rosenthal” <firstname.lastname@example.org>
Date: November 6, 2016 at 2:20:08 PM EST
Long but very interesting.
From this perspective, “financialization” can be defined as a
dysfunctional mode of interaction between the financial system and the
real (i.e., non-financial) economy, in which a disproportionate share of
the flow of the monetized full faith and credit of the sovereign is
continuously re-absorbed by the former rather than flowing to the
latter. In this mode, simply pumping more financial fuel into the system
does not ease chronic capital shortages in the non-financial sector – it
merely exacerbates capital “glut” in financial markets, further
reinforcing the underlying dysfunction. Thus, financialization is a
manifestation of the failure of the finance franchise arrangement to
deliver its intended result: effective modulation and allocation of
credit that ensures full utilization of the economy’s productive capacity.