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the problem with the 'wealth' effect, or equality effect, is that the person selling the asset is likely retired or close and won't spend it and the increase in
by codingmyway 10y ago
the problem with the 'wealth' effect, or equality effect, is that the person selling the asset is likely retired or close and won't spend it and the increase in asset prices take an equal amount from the people who need to buy for their retirements but can't because central banks own them all. So those people of working age who might have spent more are poorer and will spend less too.
The question is why central bankers can't figure that out instead of doubling down on what is basically a transfer of wealth from working age to old.
- Inthenameofmine 10y agoBased on many papers, articles, and interviews by many central bankers I have come to the conclusion that most of them aren't very smart to say the least. They think of a country as a household, rather than a complex system. Economic orthodoxy is also very irrational atm.
- lintiness 10y agoyeah, a lot of dumb central bankers running around!
- AngrySkillzz 10y agoWhat expertise do you have that makes your judgement of central bankers meaningful? Do you have any understanding of macroeconomics, forecasting, monetary policy?