Why is it anyone would want to save such an economic system?Occasional Links & Commentary
Save this?
David F. Ruccio | Professor of Economics, University of Notre Dame
Why is it anyone would want to save such an economic system?Occasional Links & Commentary
4 comments:
We'll pay you to save it.
Maths for the doubters
https://medium.com/modern-money-matters/the-function-of-government-spending-9123e71737c1
If you put the two trends together—increased individual income inequality and increased corporate savings—what we’re witnessing then is increasing private control over the social surplus. Wealthy individuals and large corporations are able to capture and decide on their own what to do with the surplus, with all the social ramifications associated with their decisions to invest where and when they want—or not to invest, and thus to accumulate cash, repay debt, and repurchase their own equity shares. [bold added]
Hence another reason* for negative yields on sovereign (hence risk-free) debt including negative interest on fiat account balances** at the central bank (aka "reserves" when the account owner is a bank) - to penalize fiat hoarding and excessive risk-free savings.
*The primary reason is to avoid welfare proportional to account balance since sovereign debt is risk-free except in the case of physical fiat which can be lost, stolen,etc.
**except for an individual citizen exemption of say, $250,000, which should be negative interest free.
Well,
I think there's an easier way to understand what Prof. Ruccio tries to say.
Given that
(1) income inequality is increasing (the share of income going to the lower, say, 99% is falling), and
(2) that the share of wages over GDP is falling,
Our incomes are a decreasing fraction of a decreasing fraction: is not only that wages as a fraction of GDP are falling, it's that an increasing part of those proportionally decreasing wages are going to CEOs, lawyers, doctors, and economists (you know, the people who are not affected by international labour mobility).
As we say Down Under: You beauty.
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