3 ms·

Nah, just made it up, it's probably total crap

• danans 6y ago
  Even if you made it up, your comment is basically describing the diminishing marginal utility of wealth. https://www.economicshelp.org/blog/12309/concepts/diminishing-marginal-utility-of-income-and-wealth/#:~:text=Diminishing%20marginal%20utility%20of%20income%20and%20wealth%20suggests%20that%20as,may%20not%20make%20you%20happy%E2%80%9D https://www.economicshelp.org/blog/12309/concepts/diminishin... https://www.investopedia.com/ask/answers/072815/what-marginal-utility-income.asp https://www.investopedia.com/ask/answers/072815/what-margina... The net effect is that consumption (and associated demand) is suppressed at the lower to middle end of the income scale, where individuals' income isn't enough to sustain their needs + wants. When these individuals spend, the demand for labor + raw materials per $ spent is high, because they are often buying consumables or durables (food, washing machines, etc). At the high end of the income/wealth distribution, there are few needs that aren't met or exceeded, so their wealth ends up chasing assets and investments that induce far less demand for labor per $ invested. A the extreme end of this are private equity funds (billions managed by a small number of people).
• imtringued 6y ago
  The primary mistake is that the return on capital is going up. Fed is pumping money which is mostly arriving in stocks and other assets. Rich people are betting on that money and thus although the PE ratio of the asset itself is going down the returns from capital gains keep going up fast enough to counteract the loss in yield.