3 ms·

Um, so I would a car every few months?

wmf 7y ago
You might be surprised how much money some people are capable of spending. There does seem to be some conflict between exhorting everyone individually to save more while complaining that the economy is suffering from shortfall in aggregate demand (i.e. people not spending enough money).
anonymous5133 7y ago
You just "spend" it on "non-productive" assets like art, gold coins, jewelry....these sorts of things.
- peanutz454 7y ago
  Is housing, like Gold Coins also a non-productive asset?
  - hedoban 7y ago
    No - its production is either the rent your tenant pays you, or the money you save by not paying rent, if you live in it yourself.
ivalm 7y ago
You can buy real assets (traditionally gold). Think of a world with large inflation -- if you are rich and hold bonds or money in the bank you wealth doesn't grow or potentially diminishes, but if you are a worker you still get money and presumably your wage growth increases quite fast (in line with the large inflation).
- Dylan16807 7y ago
  Real assets are great if r goes negative. What if r is still positive in real terms, but g is more positive?
  - ivalm 7y ago
    First, it's hard to imagine such a world. Under normal circumstances as productivity/automation increases worker labor will always be an increasingly smaller part of the value added, which means capex grows relative to opex which drives r. The way r can get suppressed long-term is through (1) wealth taxation, (2) depreciation of an important asset class (eg as birth rate falls further below replacement housing can start to depreciate), or (3) high inflation. If it is (1) then there really isn't much to be done, although hopefully the redistribution will be administered sufficiently well to help everyone achieve a high quality of life. If it is (2) then you can avoid the depreciating assets. If it is (3) then you once again avoid depreciating assets (don't hold cash/bonds/cash-like assets).

wmf 7y ago

You might be surprised how much money some people are capable of spending. There does seem to be some conflict between exhorting everyone individually to save more while complaining that the economy is suffering from shortfall in aggregate demand (i.e. people not spending enough money).

anonymous5133 7y ago

You just "spend" it on "non-productive" assets like art, gold coins, jewelry....these sorts of things.

peanutz454 7y ago
Is housing, like Gold Coins also a non-productive asset?
- hedoban 7y ago
  No - its production is either the rent your tenant pays you, or the money you save by not paying rent, if you live in it yourself.

ivalm 7y ago

You can buy real assets (traditionally gold). Think of a world with large inflation -- if you are rich and hold bonds or money in the bank you wealth doesn't grow or potentially diminishes, but if you are a worker you still get money and presumably your wage growth increases quite fast (in line with the large inflation).

Dylan16807 7y ago
Real assets are great if r goes negative. What if r is still positive in real terms, but g is more positive?
- ivalm 7y ago
  First, it's hard to imagine such a world. Under normal circumstances as productivity/automation increases worker labor will always be an increasingly smaller part of the value added, which means capex grows relative to opex which drives r. The way r can get suppressed long-term is through (1) wealth taxation, (2) depreciation of an important asset class (eg as birth rate falls further below replacement housing can start to depreciate), or (3) high inflation. If it is (1) then there really isn't much to be done, although hopefully the redistribution will be administered sufficiently well to help everyone achieve a high quality of life. If it is (2) then you can avoid the depreciating assets. If it is (3) then you once again avoid depreciating assets (don't hold cash/bonds/cash-like assets).