The Senior Lecturer should know the difference between a stock and a flow

OK, about which the Senior Lecturer tells us that:

I would suggest that the answer is simple: it is growing inequality that is creating this situation, plus a structural change in the way that wealth is held.

Now let me be clear, households is all households so in principle this should not be the case, since the ranking should be indifferent to wealth. But if the wealthy hold more of their assets through companies and pension funds invest ever more widely outside the UK, whilst the links between asset owners and their assets becomes ever harder to trace because of nominee holdings, then the likelihood that there will have been a shift of apparent asset holding out of the so-called household sector and into other categories is high. The result is that the net insolvency of a great many UK households becomes much more apparent.

The sectoral balances are the flows between the different parts of the economy. It’s the net change in any one period.

Insolvency is of course the stock position, not the flow. With household wealth (yes, net of liabilities) at whatever it is, £9 trillion or summat, we don’t have evidence that the British household sector is net insolvent.

Stocks and flows matey….

5 thoughts on “The Senior Lecturer should know the difference between a stock and a flow”

  1. So we have increasingly removed and hard to trace asset ownership and a decrease in the reported assets for a group, and from this he has assumed all those assets have disappeared.
    If the assets are ultimately still owned by the households it’s just a reporting issue surely

  2. The two principal beneficiaries of Gordon Brown were tax lawyers and Insolvency Practitioners. Individual Insolvencies more than quintupled under New Labour and then gradually declined by over 20%: the recent small rise still leaves the rate more than 10% below that in 2009-10.
    Murphy is, at best, ignorant.

  3. Hold on, the 5pm news just said we were in a recession last quarter, doesn’t that – by definition – mean that inequality is *decreasing*?

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