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 […]

 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.”

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. Recently, Noah Smith had a post on the subject of economic models titled Filling a hole or priming the pump?  It did quite a bit to restore my […]

Readers of this blog know that I am in finance, specifically global fixed income. This blog post covers wealth effects in the financial industry, which is a relatively dominant share of total US compensation, 7.3% in 2009 and likely higher now (data are truncated at 2009). My view is that economists underestimate the wealth effects […]

Continuing from my last posting, I stated the World Bank has seen the light. It has put out a report: Where is the Wealth of Nations? Reason Online has an interview with the prime author Kirk Hamilton. Oil, soil, copper, and forests are forms of wealth. So are factories, houses, and roads. But according to […]