9 
There is evidently a striking analogy between this problem 
and the problems of a permanent budget deficit considered further 
above. In both cases there is a continuing accumulation of debt 
which is not "covered"by assets in the productive sector. And in 
both cases there is an extraction of interest payments which are 
not paid out of the surplus and which tend automatically to lead 
to further accumulation of debt. In fact, the budget problem is 
only one part or one aspect or example of the more general problem 
which is presumably deeper in so far as it refers to an 
institutional development in our society. 
Could we then imagine that the earlier model of the 
public debt might be reinterpreted so as to represent the 
generalisation just indicated? I shall try just to sketch such a 
reinterpretation. We have to imagine that the economy is divided 
0 
in two parts, the surplus producing sector, briefly productive 
ii 
sector, and a financial sector. The total saving of the economy 
(which is gross of consumers credit and gross of realised capital ;i , 
gains ) is only partly used in the productive sector; the excess ? 
over that amount is employed by the financial system (banks, 
capital markets etc ) in the various outlets mentioned before. The 
lending of this excess saving, expressed as a proportion of the 
national income of the productive sector Y + corresponds to the R 
of the former model. An amount BY + has to be spent "extra", i.e. 
outside the surplus producing system. This implies a corresponding 
accumulation of debt on which interest has to be paid. This 
interest comes from various sources - from government, from 
abroad, from concerns who have bought out others, from consumers. 
There arises again the question of a different propensity to save 
of interest payers and receivers. That means that there will be