Quote:
Originally Posted by Pete F.
Here is an explanation of why you are incorrect and also why the stockmarket is so high
The new complexity science analysis describes the flows of money through the economy, not just the overall activity. It shows that there are two cycles of activity that have to be balanced against each other. The first is that workers earn salaries and consume goods and services. The second is that the wealthy invest in production and receive returns on their investments. The two loops have to be in the right balance in order for growth to happen. If there is more money in the worker loop, there aren't enough products for them to purchase. If there is more money in the investment loop, consumers don't have enough money to buy products so investment doesn't happen.
The paper shows that before 1980, there was too much money in the worker/consumer loop. That money was chasing too few products, giving rise to dangerously increasing inflation. After 1980, likely because of the Reaganomics tax changes, the balance tilted the other way. There was too much money in the investor loop and the result was a series of recessions. The Federal Reserve repeatedly intervened by lowering interest rates to compensate workers' low wages with increased borrowing, in order to increase consumption.
The research shows that the way the government is regulating the economy is like driving a car with only the accelerator and without using the steering wheel. Steering means keeping the balance between the two loops in the right proportion. While Federal Reserve interventions have helped overcome the recessions, today, we are up against the guardrail and need to rebalance the economy by shifting money back to the labor/consumer loop.
Since 1980, consumers have accumulated trillions of dollars of debt, and the wealthy have accumulated trillions of dollars of savings that is not invested because there is nothing to invest in that will give returns. This is the result of government policy reducing taxes for the wealthy in the name of increasing economic activity. No matter how much money investors have, these so-called "job creators" do not create jobs when consumers don't have money to buy products. Increased economic activity requires both investment and purchase power to pay for the things the investment will produce.
Read more at: https://phys.org/news/2017-10-wealth...nomic.html#jCp
https://phys.org/news/2017-10-wealth...-economic.html |
"Here is an explanation of why you are incorrect "
It's a different opinion. It doesn't "show" that I am incorrect.
"the wealthy have accumulated trillions of dollars of savings that is not invested "
Oh, I see. So the wealthy are all burying their money in their backyards? Or do they stuff it into their mattresses? Even if they put it in the bank, that's the money that banks use to loan money to people to buy houses and start small businesses. You can't make that wrong.
"because there is nothing to invest in that will give returns. '
The stock market hasn't generated good returns for the last 10 years?
"so-called "job creators" "
I love these qualifiers you put on every fact that you don't happen to like. The economy is only "appearing" to grow, and people who start companies are only "so-called" job creators. Some facts are just facts, even the ones that go against your ideology.