Short answer: Lending, government deficits, capital formation, and holding gains by Steve Roth Originally Published at Wealth Economics I ended my last post with an apparent conundrum: “One person’s spending is another person’s income.” It seems to imply that spending and income must be equal. And since saving equals income minus spending, saving must be…zero? That’s obviously […]
by Steve Roth Wealth Economics This post is prompted by Matthew Klein’s (very wonky) post about recent changes in QE/QT, and the Fed’s balance sheet. It prompted me to do a quick calculation that I’ve been meaning to get to: when household wealth increases (due to stock-market price runups or really anything else), what effect does that have […]
Wrong answers only: “saving” Originally Published at Wealth Economics In my last post, I tried to say precisely what the words “wealth” and “assets” mean as they’re used in this blog. This post tackles the question of wealth accumulation. Where does wealth come from? What are the mechanisms that create assets? Households and the accounting-ownership pyramid […]
The wealth of people and the wealth of nations Originally Published at Wealth Economics If you read this blog much, you’ll find many careful definitions of terms — something that the economics profession is terrible at. A blog called Wealth Economics really has to start at the top, with wealth. So here it is. “The only real, true wealth is…” You hear that […]
Reversing extreme wealth concentration means going after property income. Originally Published at Wealth Economics Economists and pundits have been cheered of late by the labor-share increase during the first couple of years of the Covid era. And even, for a moment, lower-income workers were making progress vs higher-income folks. This is good news. In the […]
From an interview on NPR’s Here and Now comes: “The official actuaries of the Social Security system say in order to get our Social Security and retirement funds in balance, they’d have to cut benefits by 25 percent indefinitely into the future,” he says. “Do I think it’s going to happen? Well I don’t know, […]
Here are reminders of Angry Bear posts and contrbutor thinking on “Wealth, debt,and consumption”. Wealth versus income Usually my articles present facts and data and try to drive down to a conclusion. This time, I’m going to drive down to a couple of questions. Income and consumption jazzbumba Part 1…spending as a fraction of net […]
Correlations and Slopes Over Time In Part 1, we looked at the ratio of consumption spending to net worth, and how it changed over time. This time we’ll look at the correlation between net worth and consumption. Here is the big picture: personal consumption expenditures (FRED Series PCE) plotted against Net Worth (FRED series TNWBSHNO) […]
Part 1 – Spending as a fraction of Net Worth Tim Duy weighed in on the output gap debate – not my topic, but he presented this chart of net worth as a percentage of GDP. Graph 1 Net worth as a Percentage of GDP That got me thinking again about the issue of whether […]
This is another look at the idea I put forth here, that – contra the standard economic idea that consumption depends on wealth – I believe that consumption depends on income. It’s worth stressing that wealth and income are not independent variables. Wealth is the accumulation of unspent income plus returns generated on that wealth […]