If house prices keep rising, that has a direct effect on the construction industry, and inversely if the capital gain disappears, the construction industry crashes. So the real economy and the financial economy are closely connected.
According to Julio, "FIRE is about 20% of U.S. GDP or value added or aggregate income". But any knowledgable macroeconomist knows that such a comparison is fallacious, since "aggregate income" does not equal GDP, and because a lot of financial transactions generating property income, net interest, and capital gains are excluded from value-added on the ground that they don't arise from production, do not represent factor income, or do not add value. Bear in mind also that many land transactions and land rents are also conceptually excluded from value-added. In fact, the role of financial institutions in the economy is quantitatively greater than suggested by value-added statistics. The problem with Marxists is that they think: "capitalist production = the whole economy". They get that idea from their reading of Das Kapital. But Das Kapital is not a study of the whole capitalist economy, and Marx never claimed that it was. J.
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