Full text: Capital Gains in Economic Theory and National Accounting

interest payments not fed from additional output due to the credit 
is also found in different cases: Consumer's credit and 
government borrowing to finance armaments or social expenditure 
wwhich as a direct effect increase effective demand. The shift in 
distribution owing to the interest payments may and most probably 
will,however, influence effective demand unfavorably if, as is 
likely, the interest income is less readily spent than most other 
incomes. In all cases the shift to interest receivers can be 
avoided if the total income of society increases correspondingly 
so that relatively speaking the position of rentiers is unchanged. 
The aftereffects of a consumers'credit or a budget deficit will 
become more inconvenient if the (net) borrowing is repeated, with 
the object of holding effective demand on the same level. The 
income is then shifted more and more to the rentiers.Since the 
interest has to be paid out of the new credits these have either 
to be increased or the effective demand created will decrease. 
Similar effects will obtain in the case of continuing increase in 
land or other asset prices. 
If, in order to escape from these troubles, measures are taken to 
reduce the debt then this will necessarily mean a corresponding 
more or less drastic restriction of effective demand. The 
experience of this is nowadays familiar to everybody in view of 
the frequent instances of restrictive budget policies. The dilemma 
is, however, the same for households and corporations. 
/ _ ( 
We have drawn a parallel between the concepts of Investment and 
Saving on the one hand and "Inflationary Spending" on Assets and 
Realised Capital Gains on the other. Actually this parallel is 
really hardly new or strange to the Keynesian tradition if we

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