Full text: Capital Gains, Pension Funds and the Low Savings Ratio in the United States

,it acts as a quasi-investment that is it produces by the action 
of the multiplier additional consumption increasing income until 
the total saving out of it equals the original consumption which 
is equal to the realised capital gains. Thus the saving which 
corresponds to the realised capital gains has been recreated in a 
macroeconomic sense. At the same time an expansion of income and 
consumption has been engendered by the boom in land values, 
financed presumably by the banks. 
As already stated the consumption and the derived income appear in 
the national accounts, but their cause and origin is hidden. The 
consumption equivalent to the capital gains comes out of the blue 
sky since the capital gain is not income, and it therefore leads 
to an apparent reduction of the saving . The SNA in fact 
erroneously supposes that the increase in the value of land,shares 
etc is financed out of existing saving, that is it is equivalent 
to dissaving. In reality it is financed by the realised capital 
gains which are saved directly, or indirectly through the action 
of the multiplier. 
The case of the pension funds is not different from that of the 
land. The gain in the share value created by the take overs leads 
to saving which is realised by the corporation in form of 
reduction of the contributions. The employees in reality do not 
suffer a loss because the capital gains offset the loss in 
To sum up: The increase in the value of land etc although it does 
not increase material capital is an increase in wealth in so far 
as it claims renumeration ( interest,dividends ). It is an 
increase in paper wealth like the public debt, and requires saving 
to finance it .This saving is provided by the realised capital 

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