4 ms·
Historically 90% of families will lose their wealth within 3 generations. How does that jive with "people will save too much" when it seems rather intuitive mon
by toolz 4y ago
Historically 90% of families will lose their wealth within 3 generations. How does that jive with "people will save too much" when it seems rather intuitive monetary policy has nothing to do with how a grandkid who has never worked a day in their life, spends money?
- Wowfunhappy 4y ago> Historically 90% of families will lose their wealth within 3 generations. Wait, that's really interesting! Where did you read that?
- toolz 4y agoI don't know where I first read it, but here's an article talking about it https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10 https://www.nasdaq.com/articles/generational-wealth%3A-why-d... Apparently this has been the case for long enough that there's even an old Chinese proverb > Wealth does not pass three generations
- wsc981 4y agoI believe it’s not really true for Europe, at least regarding the most wealthy families [0]. ——— [0]: https://www.fa-mag.com/news/how-to-stay-rich-in-europe--inherit-money-for-700-years-28671.html https://www.fa-mag.com/news/how-to-stay-rich-in-europe--inhe...
- toolz 4y agoI don't see how that article suggests it's different in Europe.
- erwincoumans 4y agoIt is an interesting Chinese proverb! >> Maintaining inherited wealth has worked for generations of Frescobaldis over 700 years The article gives a counter example (wealth passed 700 years is way over 3 generations), and tries to argue that this example is more than just an outlier? >> heirs and heiresses make up about half of Western Europe’s billionaires.
- quixoticelixer- 4y agoBecause saving money is not consuming which is bad for the economy.
- emmelaich 4y agoMore pertinently, it's not producing.
- eru 4y agoSaving money is equivalent to investing. Investing is pretty good for the economy.
- imtringued 4y agoThere is no such relation. You can save cash which does not result in additional investment. When banks refuse to lend money, saving does not result in additional investment, in fact that is the cause of QE. The government feeling compelled to invest because people in the private economy refused to invest.
- eru 4y agoCash behaves like an interest free loan to the central bank. Stuffing cash under your mattress takes it out of circulation. An inflation targeting central bank will 'print' more money to make up for the missing cash. That new cash will be spend. (Or, if people keep stuffing it under mattresses, the central bank can just keep 'printing' money.) In a few years, when you take the money from under your mattress and buy yourself a nice ice cream, the central bank will notice that total spending has gone up, and decrease the amount of money in the economy to keep inflation on target. It's exactly as if you had lend out the money from under your mattress to the central bank. (And by 'print money', I mean that they will buy assets with newly created money. Typically they buy government debt, but they can also buy stocks or gold or foreign exchange or rare Lego sets.) In any case, it looks like we don't actually disagree on what's happening, only on how to interpret it. I hold that stuffing money under your mattress isn't the problem here. Central bank monopoly on printing money is. If you stuff privately issued money under your mattress, it's the private issuer that can increase its balance sheet. No government-run central bank required for this.