When loans are made to construct factories, buy equipment or even to build or buy homes, this is a productive transaction.
But these profits were not evidence of Mr. Market doing God's work, greasing the wheels of commerce and trade by facilitating productive financial transactions.
According to Conservapedia.com, an online encyclopedia with a conservative orientation, Mr. Coase's "extraordinary insight was that the free market always reaches the most efficient level of productive activity, in the absence of transaction costs".
Most existing studies based on firm-level transaction data cannot disentangle signaling from productive effects.
It is also hard to believe that these transactions don't add to the cost of the original, productive element of the loan — without increasing the value of the real product.
Access to assets provides households with leverage to invest in productive activities and generate more output, which increases their probability of participating in market transactions.
The stupendous fees and commissions that went to those "engineering" such transactions were being picked from the carcass of a century and a half of American productive capacity.
Many founders sell all or a part of their company to an ESOP, finance a portion of the transaction and receive warrants, and stick around to lead a company that becomes more productive and more fun to work at.
More money, improved market resiliency we desperately need, and a reallocation of capital to productive long-term investment that fuels sustainable growth, creates jobs, and in the process reduces government deficits makes a financial transactions tax a win-win-win.
A tax of 0.1percentt of the transaction volume, for example, would deter rapid-fire speculation, while preserving currency exchange linked more directly to productive economic purposes.
