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This article condenses arguments being put forth by econ/finance blogs but fails to connect the dots. One angle: Banks have been receiving money at 0% interest

This article condenses arguments being put forth by econ/finance blogs but fails to connect the dots. One angle: Banks have been receiving money at 0% interest rate for 5 years now due to ZIRP (http://en.wikipedia.org/wiki/Zero_interest-rate_policy http://en.wikipedia.org/wiki/Zero_interest-rate_policy) but can't lend it to fund quality investments across the entire economy. Instead of growth across all sectors, we have exploding valuations in Internet Tech indicative of investors "chasing returns" -- a bubble! Meanwhile the middle class continues to shrink without growth of jobs in other sectors. Food stamp demand and low labor participation rates further validate this assumption that the economic recovery hasn't come for most Americans even as high-level averages such as GDP and stock markets tell us otherwise.

muzz 13y ago
> that the economic recovery hasn't come for most Americans even as high-level averages such as GDP and stock markets tell us otherwise So you're saying trickle-down doesn't work
- scrollbar 13y ago
  Not directly (but I agree). I'm saying that averages ignore distribution. If you combine one part of 100% growth and nine parts 0% growth then overall you have 10% growth. Does that mean all the parts are growing, or even most of them are growing? Nope.
  - mikeash 13y ago
    I think it's even more skewed than that. Growth that occurs among wealthier people has a disproportionate impact on the average, too. For example, if the top 10% of people have half the stuff, then just 20% growth among the top 10% and 0% growth among the rest will give you an average of 10%. On the other hand, if the bottom 90% experience 5% growth and the top 10% experience none, it looks like an average of merely 2.5%.
- adventured 13y ago
  It certainly doesn't work when it's entirely fake. The Fed is trying to skip the cause, and acquire the result. It's one of the dumbest economic concepts ever devised. Trickle-down is a goofy name for capital investment. Meaning, rich people have capital, they allocate it where they can earn a return. Nothing can ever actually alter this premise, it will exist even in the most Communist of nations; so calling anything trickle-down is absurd, it's all trickle-down, even when it's the Communist Party in the USSR that is the rich and doing the trickling down. In a healthy economy, job creation goes hand-in-hand with that capital investment, it's no more complex than that. Normally a booming stock market is the result of widespread economic growth - that is, in the absence of the Fed generating huge imbalances in the economy that spur an artificial stock market boom. This (the Fed trying to acquire the result without the cause) is the same exact reason we're seeing non-existent job creation. The Reagan recovery saw massive, full-time job months, such as 1.1 million produced in Sept 1983. Bill Clinton also saw very impressive full-time job gains. So far this non-recovery is lucky if it produces 200k jobs, and if 10% of them are full time jobs, with only 50% in hospitality and retail (low paying consumption driven jobs instead of production).

muzz 13y ago

> that the economic recovery hasn't come for most Americans even as high-level averages such as GDP and stock markets tell us otherwise So you're saying trickle-down doesn't work

scrollbar 13y ago
Not directly (but I agree). I'm saying that averages ignore distribution. If you combine one part of 100% growth and nine parts 0% growth then overall you have 10% growth. Does that mean all the parts are growing, or even most of them are growing? Nope.
- mikeash 13y ago
  I think it's even more skewed than that. Growth that occurs among wealthier people has a disproportionate impact on the average, too. For example, if the top 10% of people have half the stuff, then just 20% growth among the top 10% and 0% growth among the rest will give you an average of 10%. On the other hand, if the bottom 90% experience 5% growth and the top 10% experience none, it looks like an average of merely 2.5%.
adventured 13y ago
It certainly doesn't work when it's entirely fake. The Fed is trying to skip the cause, and acquire the result. It's one of the dumbest economic concepts ever devised. Trickle-down is a goofy name for capital investment. Meaning, rich people have capital, they allocate it where they can earn a return. Nothing can ever actually alter this premise, it will exist even in the most Communist of nations; so calling anything trickle-down is absurd, it's all trickle-down, even when it's the Communist Party in the USSR that is the rich and doing the trickling down. In a healthy economy, job creation goes hand-in-hand with that capital investment, it's no more complex than that. Normally a booming stock market is the result of widespread economic growth - that is, in the absence of the Fed generating huge imbalances in the economy that spur an artificial stock market boom. This (the Fed trying to acquire the result without the cause) is the same exact reason we're seeing non-existent job creation. The Reagan recovery saw massive, full-time job months, such as 1.1 million produced in Sept 1983. Bill Clinton also saw very impressive full-time job gains. So far this non-recovery is lucky if it produces 200k jobs, and if 10% of them are full time jobs, with only 50% in hospitality and retail (low paying consumption driven jobs instead of production).