5 ms·
It might mean that aggregate demand (consumption, investment) is low, yet that is still mostly debt fueled. It could indicate that households wealth (capital)
by pas 7y ago
It might mean that aggregate demand (consumption, investment) is low, yet that is still mostly debt fueled.
It could indicate that households wealth (capital) is too low.
- abvdasker 7y agoThis piece and the book it refers to talk a bit about that idea: Essentially that the diminishing marginal utility of wealth and its growing concentration is creating a problem of inadequate aggregate demand: http://bostonreview.net/class-inequality/jonathan-kirshner-whistling-past-graveyard http://bostonreview.net/class-inequality/jonathan-kirshner-w...
- JMTQp8lwXL 7y agoBy diminishing marginal utility of wealth, I presume you mean there is less incentive to spend money, the more of it you have. Because wealth is increasingly concentrated, less of it gets spent. Monetary velocity never recovered since the financial crisis. In fact, from 2011 onwards, monetary velocity has been at its lowest levels ever recorded. https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V