Ponzi capitalism

As unpaid added value needs credit to mediate its exchange on the market, what happens if credit stagnates or contracts? The answer is that when credit stops growing so does the mediated surplus value, and when it shrinks so must surplus value. However, the sharing of surplus value between rent, interest and dividends can be modified. With falling rent and zero interest, corporate profits can continue to grow moderately, making shares the best investment on offer. But soaring share prices (helped by company buy-backs) then reduce the fractional returns of dividends until they join the dismally low returns on real estate and bonds. At which point new capital has nowhere to go, old capital no longer brings a return and incomes promised by pension funds are not forthcoming.

When the traditional returns on investments (rent, interest and dividends) are insignificant, speculation on the value of investments becomes the main source of capital incomes. It is the buying and selling of investments, not the investments themselves, that generate income. Casino capitalism, with nanosecond transactions by programmed computers, merely redistributes existing wealth by feeding on itself. The demands of accumulated capital are greater than the declining credit mediated surplus value, so it compensates by transforming capital into revenue, which is like a Ponzi scheme and is bound to fail. Governments everywhere are sitting on top of volcanos ready to erupt. Are they oblivious, or are they too scared to tell?