Any capital formation that does succeed generally comes from the owner. Because saving must precede investment, the whole process is tedious and time-consuming. Borrowing and lending can occur, but the process is cumbersome. As a result, growth and development proceed only at an extremely slow rate. In a monetary production economy, buyers and sellers set aside one or more real assets to serve the functions of money.
Money is a generalized claim on all other assets.
Buyers must always have money to exchange for the seller's real assets. Capital sinks include land, artifacts, antiques, precious metals, sacred cows, relics, gambling, and prostitution. The Credit Production Economy A credit production economy has real assets and financial assets. Financial assets have no intrinsic value. They have value in exchange, but no value in use.