The Influence of Internal Contradictions in the Us Economy on Global Financialization and the Expansion of Fictitious Capital

• Main Authors: D. A. Dinets, R. A. Kamaev
• Format: Article
• Language: Russian
• Published: Government of the Russian Federation, Financial University 2021-04-01
• Series: Финансы: теория и практика
• Subjects: : financialization; fictitious capital; federal reserve system; off-balance sheet bank transactions; derivatives; capitalization; liquidity
• Online Access: https://financetp.fa.ru/jour/article/view/1183
• ISSN: 2587-5671; 2587-7089

The financialization genesis of the global economy centered in the United States is on the bifurcation point now— a fictive capital’ expansion is damaging with the social capital regeneration mechanism disaster. The method of identifying and estimating the fictive capital’ extension is absent for now. The fictive capital exists as a metaphor on the science papers but not as an institutional basis of the capital flows directions. The paper aims to update the configuration of the global financial system, its dependence on the performance of US corporations and banks; to identify the sources of vulnerability of world finance and global liquidity from the fictitious capital of American financial markets. The methodology is theoretical pattern’ of financial capital movements and its real statistical market indicators comparison. The empirical base is statistical data about the financial flows and financial results especially about the US as a global financial center. Based on the results the authors have revealed an origin of fictive capital on the US bank sector by the justification for the conclusion of liquidity above the profitable as the purpose of financial operations. This conclusion is confirmed with the scale of off-balance sheet transactions of banks. Besides the regression between the prices of derivative’ basis assets and stock indexes has been shown. Also, the market capitalization of American companies is not sensitive to change in market liquidity indicators. The authors concluded that global financialization is supported by significant internal contradictions in the US economy. The source of contradictions is the financial mechanism for withdrawing liquidity from the sphere of production and circulation into the sphere of financial markets. Capital investment using instruments of the US financial market entails the threat of losing their liquidity. Forecasting the dynamics of the global economy without taking into account the role of fictitious capital, which is emerging in the American financial markets, leads to global vulnerability and may cause the next financial crisis.