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Bwahahahaha

Three observations follow. The first is that this adds to my belief that interest rate rises have fuelled inflation by increasing the disposable income of the moderately wealthy, likely more elderly population, who have an inclination to spend.

Titter, snort, gasp.

‘Ee’s got the sign wrong.

There is indeed something called the marginal propensity to save – or the inverse, to spend. Of extra income sxome amount might be saved, some spent. This does indeed change according to current position upon the economic totem pole. But he’s got the sign wrong. It is the lower paid who are more likely to spend marginal income, not the richer. The richer are more likely to save.

No, really, ’tis true. Which is why, when people talked about how spending should increase in order to avoid a recession they all said that the spending should be deliberately targetted at the poor because they’d spend it, not save t6he extra income like richer folk would.

“People” there doing the talking including one Richard J Murphy.

2 thoughts on “Bwahahahaha”

  1. Dennis, Noting The Bright Light Emanating From Ely

    The first is that this adds to my belief that interest rate rises have fuelled inflation by increasing the disposable income of the moderately wealthy, likely more elderly population, who have an inclination to spend.

    Any data to back that up, Richard, or did you just yank it out of your ass this morning over tea?

  2. My older colleagues and friends are all tightening due to higher mortgage rates.

    Sure, my mortgage is on a second house, but it’s still a mortgage.

    My parents and their genuinely old friends just spend what they spend. They are basically immune to interest rates. No mortgages and almost fixed income.

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