7.7 EPCE feedback provides a permanent stimulus to the market economy.
1. The EPCE feedback is an ongoing stimulus mechanism through new savings in capital.
The revival through new savings in capital has no perverse economic effect under two conditions. No new savings in capital comes from a debt taken out in order to realize it. Enterprises raise or maintain their capitalization rate at a high level. In particular, start-up enterprises keep this rate as close as possible to 100% until they cross the threshold at which they are structurally profitable.
2. The worst that can happen because of new savings in capital is obvious.
Collectively considered underwriters lose the bulk of their stake. To the extent of this largest, the supply-side stimulus has degenerated into a demand-side stimulus, after injecting into economic activity the purchasing power lost by savers. Too many economists and politicians still pretend to be mistaken about the consequence of the revival by new investments in capital , which has been a failure: the transformation, on the basis of this share, of savings into expenses in exchange for the loss of these savings by their holders.
3. The worst that can happen because of new savings in capital is no less a blessing.
Lost capital reduces the mass of loans whose principal is unrecoverable. Savers impoverished by the loss of all or part of their savings in capital find at best little reason for consolation. The general interest nevertheless requires that the accumulation of false rights (Jacques Rueff) be restricted, which constitute irrecoverable debts. In the absence of sufficient preventive restructuring, increasingly sophisticated financial engineering makes it less and less avoidable to eliminate false rights other than through large-scale crises.
4. Creditism distracts from the full exercise of EPCE feedback.
Yes, say the advocates of the minimum capital per enterprise, new investments of this kind are good when only they serve as a basis for credit leverage. They consider the maximization of profits and surplus values inherent in the market economy. They push the idea of the rate of profit on capital to a level sufficient for the return to full employment or its maintenance.
5. Centralism distracts from the full exercise of EPCE feedback.
A Social Credit and centralist financial apparatus is also doubly inclined to hinder the EPCE feedback. The removal of these obstacles may therefore prove impossible without a profound change in political philosophy, including its economic aspect.