Economic Black Holes

The long-range impact of real returns on any form of saved or invested money on a macroeconomy is modeled and discussed. It is shown that, subject to plausible conditions, an economic system with positive real returns must eventually reach a depression-like economic state, regardless of productivity growth, or growth in output. The observed disproportionate growth of financial sectors in recent years is explained by the proposed model. An alternative explanation for long-range depressions is discussed and rejected. Finally, an economic indicator for financial fragility is proposed.