From what i was able to follow of your paper, i will answer yes , this is not only a financial driven economy but a “liquidity driven economy”, the tail is waging the dog.

What is going on, not only in the US but in almost every economy around the world, is that investors are shorting their “fiat currencies” by borrowing and investing in whatever they can lay their hands on. (almost all assets classes are taking off).

People are leveraged to their bones, just look at Goldman Sachs, making a ton in net profits but leveraged to the tilt.

I agree with your way to measure the economy but it fails, like the traditional model, in the sense that it “aggregates” to much it it tells us little about the structure of the economy itself. It shows very little of the shape of the production pyramid.

From my point of view , I see mal-investments galore completely dependent on liquidity coming in and as soon it dries out we will massive bankruptcies or , if it doesn’t, massive inflation , Latin American style.

Olmedo

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