Monday, June 23, 2014

Asset rich, income poor

Moral: Wherein we look at savings and savers, a little more (no reason to think that we are complete, at this point).

The WSJ (June 20, 2014) article, The Asset-Rich, Income-Poor Economy, was a welcomed change due to its reasonableness and to the obvious proper insight of the authors (for example, they note the problem of retirees straining to enjoy their golden years under the current regimen). Actually, I'm running into articles that remind me of 2006/2007 when I was first reading analysis about the state of the economy. Many analysts were seeing problems mounting up way  before the downturn occurred. And, I don't need to list those who kept up their headstrong rush all the way to their crash.

Must we have these silly crashes? No. Is Yellen helping? Not like she thinks. Is it good for her to continue to flay savers? We'll see, they are a hearty lot.

Back to the article which is worth a read. The authors provide a chain of relationships that support a sustainable economy. It is termed in the sense of "wealth" in the following way:
    A proper mix of labor, capital, and know now goes into productivity; productivity provides labor income; income goes, in part, to savings; savings becomes capital; capital supports investment, ... and so forth, recurrent-ly. (emphasis mine)
One can think of this as cyclic or even with a mechanical sense. But, if you want to get relative, that works, to boot. The thing is that we have never balanced these things in the manner to which they ought to be handled.


Notice, savings goes to capital (not the ca-pital-sino, per se) in a real sense. And, there are better ways to handle savings than with the chimera and its train. So, we will be describing further the chimeric aspect of the proverbial train (at the same time, debt's role needs to be considered - as in, pure debtors (that is, those with no capital) create an inner & inter generational drag on the economy).

Remarks:  Modified: 06/23/2014

06/23/2014 -- Yellen behind the curve

No comments:

Post a Comment