Private Fixed Capital

No, the capital wasn't first broken.

Fixed capital represents the tangible, physical assets used to produce a product, but don't get used up as part of the production process. Things like land, the physical buildings, the machines, the computers and filing cabinets in the office...even things like patents and copyrights. Private fixed capital is all that stuff owned by private entities, rather than the government. So...the building where a Tesla is made would count as private fixed capital. The barracks on an army base would be public fixed capital.

The term comes up in economic discourse in Ivory Towers. Academics will look into subjects like "Determinants of Private Fixed Capital Investment in 19th Century Argentina" or "Private Fixed Capital Formation in Developing Countries with Average Rainfalls of More Than 2,000 MM Per Annum." They're tenured. They need to find things to do. So...why not?

Related or Semi-related Video

Finance: What is a merchant bank?4 Views

00:00

What is a merchant bank? Well there's the theoretical manner

00:08

in which the merchant bank came to the party and that was largely by providing [merchant bank partying in a disco club]

00:12

payment options escrow currency hedges and other means of spraying wd-40 on the [merchant bank holding escrow papers]

00:19

international tracts when American corporations did business with merchants [WD40 sprayed on train tracks]

00:23

from other countries well the basic idea then was that a merchant bank lived and [foreign merchants shaking hands]

00:28

breathed the banking international transaction universe and knew every [banks play pong across world map]

00:33

trick in the book when dealing with shady countries who had hoped that they

00:37

could get some gullible American corporation to ship them twenty five

00:42

thousand yellow and orange rubber duckies with the squeaky sound thingies [rubber duckies getting squeezed in the tub]

00:46

yeah and then somehow abscond without paying well the duck seller was schooled

00:52

in molding rubber they were not schooled in international financial transactions

00:57

so back then it made perfect sense for the duck maker to hire the merchant bank [merchant bank enters screen with duck maker]

01:01

to deal with international escrow complexities far beyond their core skill

01:06

and the way they hired them is basically the merchant bank would discount the

01:10

bill that was owed to them and pay that money in cash in American u.s. dollars [money changing hands]

01:15

to that American corporation and the bank would then be responsible for [bank choking international seller]

01:18

collecting the full price and that spread between the full bill and what

01:22

they paid the American company was how they made money well in the process of

01:26

being deep in both the strategic operations of companies in the US and in

01:31

understanding how the global marketplace for Commerce work merchant banks evolved

01:35

into more or less one flavor or another of an investment bank helping clients [merchant bank bulding turns into investment bank]

01:40

sell debt and equity and other money raising devices so that they could

01:45

continue selling ducks or rakes or tractors or lawn flamingo's yeah those [rubber duckies floating by]

01:50

are cute in the modern incarnation of merchant banks while many are actually [merchant bank throws bags of money to businessman]

01:54

able to not just advise but invest in the companies to whom they are close all

02:00

kinds of other complexities live in the border-to-border transactions and [merchant bank sends money to Mexico]

02:05

because the personal relationships of the merchant bankers themselves ended up

02:09

getting so close to the management into the government's they do [group of government officials]

02:13

with into the competitive marketplaces well each of which carried enormous

02:17

friction and merchant banks and the bankers who run them have found

02:21

themselves in the middle of all kinds of commercial transactions yeah very

02:25

lucrative business today people if you want to whine about taxes go into this

02:28

one so today merchant banking is really more

02:31

like just banking with fewer regulations and a whole lot more upside when they're

02:36

right and of course the most successful merchant banks are the ones that you

02:40

know offer merch [merchant bank wearing merch clothes]

Find other enlightening terms in Shmoop Finance Genius Bar(f)