Wealth and Income Appendix
In this post, earlier today, I forgot to link to this article over at Naked Capitalism.
The salient point is, that specifically for investors, spending is related exclusively to income, never to wealth.
It goes on to posit that QE and monetary policy are killing demand.
As Steve would say, “Go read it.”
For someone to receive interest, somebody else has to pay it.
What is “killing demand” is losing the $1T+/yr in free bubble money injections the middle class was receiving, 2004-2007.
That and the continual $500B+/yr trade deficit that is ripping money out the paycheck economy.
All the intervention since 2008 has been palliative responses in reaction to these major issues (arguably the bubble economy money fountain was also a respone to the trade deficit issue that got rolling in the 1990s).
Troy –
Are you arguing for a wealth effect, or do you suppose people saw that bubble money as income?
JzB
the latter, of course.
And I don’t suppose it, I know it.
I don’t suppose the latter, I know it. And I have the pretty St Louis FRED graphs to prove it. . .
Also, I think it was someone here to put me onto Steve Keen not too long ago. Big thanks for that, he’s got my thesis : )
Troy –
I loves me some FRED graphs. Which ones do you have in mind?
JzB
this one tells the main story:
http://research.stlouisfed.org/fred2/graph/?g=4Bv
this one tells the main story:
http://research.stlouisfed.org/fred2/graph/?g=4Bw
this one tells the main story:
http://research.stlouisfed.org/fred2/graph/?g=4Bw