5 
rentiers will spend a part of their income which will absorb 
resources. That implies that this type of finance will sooner or 
later lead to full employment where we come back to the original 
model because room has to be made in the national budget reckoning 
for the consumption of the new rentiers and that will happen by 
appropriate taxes or a reduction of spending. In the intermediate 
period there will also be an increase in rentiers'share of income 
and consumption, although less drastic than in the above tax model 
because the interest will be an additional income and not as 
before a replacement of other incomes. 
r 3.Another source of effective demand is foreign investment (an V 
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export surplus) which is a very good way of creating demand 
! ■ / \ 
especially in manufacturing.But the foreign assets acquired in 
consequence ordinarily yield a return of interest,dividends or 
profits, a rentiers income again. The case offers thus to some / 
l 
extent a parallel to the deficit spending.Here also we can see 
S / j 
that in the course of time a whole class of rentiers tends to 
/ \ 
arise ( think of late Victorian or Edwardian England ) accounting 
I jr 
S 
for a growing portion of the national income and depressing the 
\ / 
propensity to consume of the nation as a whole. To prevent the 
unlimited accumulation of interest income the country would have 
to operate an import surplus which would again imply a negative 
\ effect on demand. 
Of course, from the ordinary business man's point of view there is 
a world of difference between the two cases: Here, there are no 
taxes and budgetary problems involved, there is an investment 
which pays for itself, and the country as a whole is getting 
accountably richer. It is a case of sound business principles, but 
the ultimate logic of a country with an inveterate structural 
surplus is to buy up the whole rest of the world and earn the