The U.S. Economy Depends More Than Ever on Rich People (WSJ, Rachel L. Ensign) \ stacker news ~econ

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The U.S. Economy Depends More Than Ever on Rich People (WSJ, Rachel L. Ensign)www.wsj.com/economy/consumers/us-economy-strength-rich-spending-2c34a571

750 sats \ 8 comments \ @denlillaapan 11h econ

I generally hate economics stories that are like "the economy is fueled by this and that consumption."

Eh, no. Consumption consumes, i.e., destroys, i.e., is no more. That cannot possibly hope to build anything... it can, of course, redistribute wealth from assets/borrowing to workers earning an income, working on the quantity domain moreso than the price domain.

But alas, we're stuck in accounting and sectoral GDP attribution so we get headlines like this

Many Americans are pinching pennies, exhausted by high prices and stubborn inflation. The well-off are spending with abandon. The top 10% of earners—households making about $250,000 a year or more—are splurging on everything from vacations to designer handbags, buoyed by big gains in stocks, real estate and other assets.

yeah, that's your Cantillion redistribution right there. Money holders subsidising asset increasing in value, out of which the rich comfortably spend (with more borrowed money, obviously (#848831)).

This number is pretty terrifying: top-income earners' spending used to be 36% of all consumer spending—now, just shy of 50%.

Taken together, well-off people have increased their spending far beyond inflation, while everyone else hasn’t. The bottom 80% of earners spent 25% more than they did four years earlier, barely outpacing price increases of 21% over that period. The top 10% spent 58% more.

Affluent people also found themselves with assets, such as stocks, that suddenly were worth far more. The net worth of the top 20% of earners has risen by more than $35 trillion, or 45%, since the end of 2019, according to Federal Reserve data. Net worth grew at a similar rate for everyone else, but it translated to a lot less money: an increase of $14 trillion for the bottom 80%.

Cue left-wing anger over a broken capitalism.

non-paywalled here: https://archive.md/iU59O

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88 sats \ 0 replies \ @Undisciplined 11h

barely outpacing price increases of 21% over that period

Nice try, but normal people actually have to buy all that stuff that gets left out of headline CPI figures and that was increasing in price faster.

Since the largest ever bottom-up wealth transfer just happened during covid, this is exactly what we'd expect to see.

172 sats \ 0 replies \ @Solomonsatoshi 11h

You don't have to be left wing to decry the corrupt and misguided 'reforms' that have led to this. You just have to understand the underlying nature and functionality of the fiat monetary system.

This gross and growing inequality is the result of neoliberal deregulation of banking in the late 1970s and early 1980s. The financialisation of everything.

The removal of the crucial restriction on the purpose for which commercial banks could issue fiat debt finance- prior to the neoliberal 'reforms' commercial banks could only finance productive purposes. After the reforms the fiat debt funding of speculation sky rocketed- resulting in sky rocketing assets prices (think housing) and the establishment of the parasitic rentseeking crony capitalism that is the US and most western economies today.

Neoliberalism being the antecedent to Libertarianism. Their markets solve everything ignore the propensity to form monopolies and cartels and to misuse fiat debt funding for speculative purposes resulting in a parasitic wealth creation model where inequality skyrockets, productivity plummets and here we are.

Thanks for nothing Neoliberal Libertarians. You wrecked the west and opened the door for China to rise and subjugate western civilisation.