You may think I'm exaggerating. You may think that what I am about to write is widely understood. You would be wrong. Either I'm dead wrong about what I'm saying, or virtually the entire economics profession in the financial press is confused about this topic. You be the judge.

PHYSICAL CAPITAL FLOWS

Let's talk about physical capital flow. I got this example from Arthur Robinson. He has a research institute in southern Oregon. He built this facility out of spare parts and scrap metal. It is self-funded. There is no government money involved. Robinson is better informed about scrap metal than anyone I know.

A few years ago, he told me this story. An American company that was involved in manufacturing went bankrupt. It offered its plant for sale. Its price was based on scrap metal prices. The company sold the entire plant to a group of Chinese businessmen.