Prime, prime, stuff here.
The Boston Consulting Group (who are big enough to do the research) have published a new report on global wealth. It’s something they have done for some time.
In other words, they think wealth will grow vastly quicker than earnings possibly can. Or, to put it another way, inequality is going to rise, and rapidly.
Umm, what? Income inequality will rise because wealth does? Wealth inequality will rise as total wealth does? Note that that’s not necessarily true, depends on the split of who owns the wealth. More of it going into funded pensions could reduce wealth inequality for example. Surely he’s not saying that income inequality will rise as total wealth does? That makes no sense of course so he couldn’t possibly be saying that. As to the idea that wealth grows faster than income, that looks pretty likely to me. Income being the err, income from either wealth or labour, wealth thus being a multiple of the income that can be gained from it……multiple.
And what is this wealth held in?…..In other words, we’re talking financial assets
Well, yes, yes we are. Wealth is here being defined as financial assets so a report into wealth will be looking at financial assets. This is tough analysis, no?
but with cash surprisingly significant in large parts of the world. And remember that cash saved is dead money for economic purposes: it’s money effectively withdrawn from the market that contributes nothing to investment, growth or innovation, let alone new employment. These people can’t say their savings are doing something useful because we know they are not. All they’re doing is slowing the world economy down. No wonder we remain in the doldrums, economically.
Erm, what? He then doubles down in the comments:
Richard Murphy says:
July 15 2017 at 11:28 am
Cash is rent seeking
Blimey, who knew? In most parts of the rich world interest rates are below inflation. Thus cash holdings have negative income – this is rent seeking?
Richard Murphy says:
July 15 2017 at 11:23 am
Deposits do not create loans
Loans create deposits
Banks literally never lend deposited money
All loans are made out of thin air
That’s right, banks never, ever, fund their loans through the use of deposits. That’s why Northern Rock didn’t go bust, there just was no problem at all in the fact that it couldn’t attract the deposits to fund the loans it had already made but which had not yet been bundled into those Granite bonds, the sale of which is just another manner of attracting deposits. The Veneto banks weren’t going bust as they lost their deposit bases, Monte dei Paschi ditto. Nope, deposits never fund banks.
Seriously, how did anyone this ignorant ever get employed in British academia? Sure, I know, it’s Islington Technical College but still, don’t even they have standards any more?