In his March 9 podcast of a weekly online show called Reading Marx’s Capital, City University of New York professor David Harvey predicted tumultuous times ahead.
He was especially concerned about whether financial managers can prevent an “almighty crash, as we in effect have a global Ponzi scheme”.
The term “Ponzi” indicates a financial arrangement where the debtor is so far “under water” that new loans are needed simply to pay back the interest on the existing debt.
Harvey – who (by way of disclosure) was my PhD supervisor – was referring to the build-up of “fictitious capital,” that is, paper representations such as stock market shares, securities or other certificates signifying investor willingness to receive the profits, dividends and interest that come from underlying “real” capital.
