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The Transition From Industrial Capitalism To A Financialized Bubble Economy

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Executive Summary

For the past decade, the U.S. economy has been driven not by industrial investment but by a real estate bubble. Although the United States may seem to be the leading example of industrial capitalism, its economy is no longer based mainly on investing in capital goods to employ labor to produce output to sell at a profit. The largest sector remains real estate, whose cash flow (EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization) accounts for over a quarter of national income. Financially, mortgages account for 70 percent of the U.S. economy's interest payments, reflecting the fact that real estate is the financial system's major customer.

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