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Standard & Poor's realizes income inequality is a thing

Duh! Poor people are always under a lot more pressure to spend money, which then gets re-spent. The wealthy certainly can spend money quickly, but usually don't. The whole concept of the velocity of money seems to have eluded a lot of economists for a long time. I think a tax on retained capital is a wonderful way to stimulate an economy.
 
Duh! Poor people are always under a lot more pressure to spend money, which then gets re-spent. The wealthy certainly can spend money quickly, but usually don't. The whole concept of the velocity of money seems to have eluded a lot of economists for a long time. I think a tax on retained capital is a wonderful way to stimulate an economy.

The above would be true, if the only thing driving the economy was short term spending. But it's not. The economy needs "retained capital". With no retained capital, there would be no factories, malls, or hard products being produced.
 
https://www.globalcreditportal.com/...eRevId=1&fee_ind=N&exp_date=20240804-19:41:13

•Standard & Poor's sees extreme income inequality as a drag on long-run economic growth. We've reduced our 10-year U.S. growth forecast to a 2.5% rate. We expected 2.8% five years ago.

But they're not too sure what to do about it except not to raise taxes too much.

The S&P claims that income inequality has a negative impact on the economy?

Well, that proves it. The S&P has been taken over by collectivist nannystaters who hate our freedom. Everyone knows that greater income inequality leads to a more successful and robust economy, whereas reduced economic inequality causes total economic destruction. Therefore, the only possible conclusion is that the S&P is part of a vast international communist conspiracy (excuse me, I meant to say "agenda" instead of "conspiracy").

My best guess is that the socialist dictator Obama is somehow behind this. [/conservolibertarian]
 
Why not? People would first consume the things they needed, and the. Do the things humans always do; pool their free time to free more resources, and do bigger things. A lack of pooled official authority does not prevent pooled respect from achieving the same goals. People will still elect leaders or even hire them, to provide vision and direction, or stride along with their force of will. It has happened that way since the beginning of recorded history.

People want to build something, and the only question is how that gets delegated, and the extent of hoarding we allow.
 
People save because they're insecure about their financial future. Remove this insecurity and they'll gladly spend.
 
https://www.globalcreditportal.com/...eRevId=1&fee_ind=N&exp_date=20240804-19:41:13

•Standard & Poor's sees extreme income inequality as a drag on long-run economic growth. We've reduced our 10-year U.S. growth forecast to a 2.5% rate. We expected 2.8% five years ago.

But they're not too sure what to do about it except not to raise taxes too much.

Wow, Obama must have really screwed things up in the last 5 years to knock that much off a 10 year growth rate.
 
Duh! Poor people are always under a lot more pressure to spend money, which then gets re-spent. The wealthy certainly can spend money quickly, but usually don't. The whole concept of the velocity of money seems to have eluded a lot of economists for a long time. I think a tax on retained capital is a wonderful way to stimulate an economy.

An interesting concept but would that not only move even more money to off-shore untaxed economies?

Duh! Poor people are always under a lot more pressure to spend money, which then gets re-spent. The wealthy certainly can spend money quickly, but usually don't. The whole concept of the velocity of money seems to have eluded a lot of economists for a long time. I think a tax on retained capital is a wonderful way to stimulate an economy.

The above would be true, if the only thing driving the economy was short term spending. But it's not. The economy needs "retained capital". With no retained capital, there would be no factories, malls, or hard products being produced.

Has not the greatest portion of our production capacity already been outsourced to other countries? About the only new capital investment I observe is infrastructure to sell more unnecessary commodities and services to people. It is almost impossible to find durable goods or textiles made in Canada or the US and an increasing amount of food in our grocery store is coming from China and Asia.
 
Duh! Poor people are always under a lot more pressure to spend money, which then gets re-spent. The wealthy certainly can spend money quickly, but usually don't. The whole concept of the velocity of money seems to have eluded a lot of economists for a long time. I think a tax on retained capital is a wonderful way to stimulate an economy.

The above would be true, if the only thing driving the economy was short term spending. But it's not. The economy needs "retained capital". With no retained capital, there would be no factories, malls, or hard products being produced.

The question is how much capital is needed. We seem to have too much capital right now, enough excess capital to have built repeated asset bubbles in the stock market, real estate and the commodity markets.

There has to be a balance between the money that rewards capital, profits, and the money that rewards labor, wages. Wages make up most of the effective demand in the economy. Without demand no one will invest in new production facilities, the only type of investment that will produce jobs and high wages. The labor share of GDP has dropped by more than 8% of GDP in the last thirty five years, since we intentionally started suppressing wages. 8% of a 17 trillion dollar economy is more than a 1.36 trillion dollars a year that we are intentionally reducing wages by to increase profits. It is pretty much a trillion dollars in lower demand in the economy. And it will be another trillion dollars a year next year. After a while it is going to add up to real money.

And the money is not going into investments in the economy, it is going into the financial markets where it is building asset bubbles that destabilize the economy, that actually hurt the economy.
 
An interesting concept but would that not only move even more money to off-shore untaxed economies?

Duh! Poor people are always under a lot more pressure to spend money, which then gets re-spent. The wealthy certainly can spend money quickly, but usually don't. The whole concept of the velocity of money seems to have eluded a lot of economists for a long time. I think a tax on retained capital is a wonderful way to stimulate an economy.

The above would be true, if the only thing driving the economy was short term spending. But it's not. The economy needs "retained capital". With no retained capital, there would be no factories, malls, or hard products being produced.

Has not the greatest portion of our production capacity already been outsourced to other countries? About the only new capital investment I observe is infrastructure to sell more unnecessary commodities and services to people. It is almost impossible to find durable goods or textiles made in Canada or the US and an increasing amount of food in our grocery store is coming from China and Asia.

Why would you assume that? The US is the second largest manufacturer in the world. We are the third largest exporter (behind China and Germany). Many US companies are coming back to the US (called "inshoring" if you're curious. As a corporate banker, I can tell you that I am swamped. I'll finance more large capital assets (primarily equipment) this year that the previous four years combined.
 
The above would be true, if the only thing driving the economy was short term spending. But it's not. The economy needs "retained capital". With no retained capital, there would be no factories, malls, or hard products being produced.

The question is how much capital is needed. We seem to have too much capital right now, enough excess capital to have built repeated asset bubbles in the stock market, real estate and the commodity markets.

There has to be a balance between the money that rewards capital, profits, and the money that rewards labor, wages. Wages make up most of the effective demand in the economy. Without demand no one will invest in new production facilities, the only type of investment that will produce jobs and high wages. The labor share of GDP has dropped by more than 8% of GDP in the last thirty five years, since we intentionally started suppressing wages. 8% of a 17 trillion dollar economy is more than a 1.36 trillion dollars a year that we are intentionally reducing wages by to increase profits. It is pretty much a trillion dollars in lower demand in the economy. And it will be another trillion dollars a year next year. After a while it is going to add up to real money.

And the money is not going into investments in the economy, it is going into the financial markets where it is building asset bubbles that destabilize the economy, that actually hurt the economy.

Don: I'll do some research on this and get back to you. I don't have a link now, but I'd be surprised if the US has too much equity. In fact, I see companies that are undercapitalized today due to severe losses in 2008 to 2012. Companies shrank the balance sheets to create cash when their sales declined. Profitability is returning, but will take awhile for capitalization to recover to pre-08 levels.
 
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