tag:blogger.com,1999:blog-1513588060557517621.post3250080156130841301..comments2023-03-22T12:40:49.113+01:00Comments on Notes on the Next Bust: Total Wealth and the Obvious Effect on YieldsAri Andricopouloshttp://www.blogger.com/profile/00181838814176635218noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-1513588060557517621.post-69347411949813307202015-05-27T09:54:36.482+02:002015-05-27T09:54:36.482+02:00Ha ha! Yes, interesting experiment. I suspect that...Ha ha! Yes, interesting experiment. I suspect that you are correct about the economic impacts.<br /><br />Good luck in getting it through Congress though. I assume you have a few billionaire backers to bankroll the politicians.Ari Andricopouloshttps://www.blogger.com/profile/00181838814176635218noreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-84240762055952435372015-05-26T23:30:30.412+02:002015-05-26T23:30:30.412+02:00Here's how I would construct a helicopter drop...Here's how I would construct a helicopter drop in the U.S. to provide good bang-for-the-buck as well as to learn something about the effects of income/wealth inequality :<br /><br />Year 1 : Send checks to everyone in the bottom 90% of the income distribution , amounting to 5% of gdp ( $800-850 billion ) , distributed proportional to their last year's earnings ( or , alternatively , the average of the last 3 years ). Since the bottom 90% now gets ~ 50% of incomes , this would amount to a noticeable 10% increase.<br /><br />See how things go. Some of that money will be used to pay off debt ( a good thing ), but I suspect that demand will increase substantially nonetheless , and it will be considered a successful stimulus.<br /><br />Year 2 : Same as year 1 , except now you appropriate 5% of gdp from the wealth of the top 1% , using a progressive schedule so that the very rich are hit the hardest. Since the 1% hold about 40% of the 4.5x wealth/gdp total , this will only reduce their holdings from 1.8x gdp to 1.75x gdp. They'll scream , but they'll do just fine. Use that 5% to fund government spending and/or across the board tax cuts.<br /><br />Over the two year period , note the changes in consumption , gdp , private debt , net worth , etc. The results from this exercise will tell you a lot about how income and wealth inequality impacts the economy. My guess is that the evidence would be compelling enough that a re-balancing of the income distribution would be undertaken , with confidence that further helicopter drops would be unnecessary once in place.<br /><br />MarkoAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-30166914444136642942015-05-26T21:36:39.379+02:002015-05-26T21:36:39.379+02:00The whole point is that it is not net assets. It i...The whole point is that it is not net assets. It is gross assets. All of these assets require interest or dividends to be paid on them.<br /><br />The people who are short the assets (eg homeowners with a mortgage or corporations owing money) must pay interest or dividends. <br /><br />The total amount of money paid on interest and dividends is almost all paid to savers rather than workers. Therefore, assuming that workers get a certain proportion of gdp, then what is left needs to be divided up between more assets.<br /><br />I should have said gross wealth rather than just saying wealth. I do describe it by saying that increase in private sector debt causes wealth but should have been more clear.Ari Andricopouloshttps://www.blogger.com/profile/00181838814176635218noreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-65167720048091642852015-05-26T21:23:57.433+02:002015-05-26T21:23:57.433+02:00" I present you the following graph of total ...<i>" I present you the following graph of total assets in the UK divided by GDP:"</i><br /><br />The graph says total UK wealth to GDP ratio and you said, total assets in the UK divided by GDP.<br /><br />For wealth I would subtract debt from assets. equity=assets-debt as wealth. <br /><br />Also, the graph says extrapolated from 2006-present ONS figures from a 2008 report. It is currently 2015.<br /><br /><b>The problem of the aggregate:</b><br /><br />Also, when every thing is aggregated together almost most meaning is lost. Less aggregated would be to have data for sectors. One sector could be doing poorly and an other doing great but the aggregate could look horrible, O.K., great, or other. This is known as the problem of aggregation.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-4293620713506301232015-05-26T21:14:43.014+02:002015-05-26T21:14:43.014+02:00I should have been clearer.
Wealth is defined as ...I should have been clearer.<br /><br />Wealth is defined as total financial assets held by the household, the corporate and the financial sector, taken from this ons report:<br /><br />http://www.ons.gov.uk/ons/rel/elmr/economic-and-labour-market-review/no--4--april-2008/new-historical-data-for-assets-and-liabilities-in-the-uk.pdf<br /><br />All of these assets require interest or dividends to be paid. So it does not include real assets.<br /><br />Savings in general I define as assets that have monetary value but which cannot be consumed or used. So they are savings with monetary value rather than savings of actual value.This includes money, bonds, shares, property for investment and anything that is held as a store of value. I discuss this a bit more in other posts.<br /><br />Basically, everything I discuss refers to monetary value. Does this help?Ari Andricopouloshttps://www.blogger.com/profile/00181838814176635218noreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-27074569770849957842015-05-26T21:03:41.394+02:002015-05-26T21:03:41.394+02:00Is/are your definition/s of saving consistent? An...Is/are your definition/s of saving consistent? And, equally applied to different types of accounting entities?<br /><br />For your definition of savings are you always including real flows with the monetary assets flows? Do you count the liabilities too? Do, you count peoples time? <br /><br />Are you only talking about cash and deposits?<br /><br />Are you only talking about monetary assets and liabilities?<br /><br />Are you only talking about financial assets excluding real assets?<br /><br /><br /><br />This question is to see a little where your coming from. Do you understand double entry bookkeeping or accounting?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-54203157067685726252015-05-26T20:52:16.341+02:002015-05-26T20:52:16.341+02:00What do you mean by wealth?What do you mean by wealth?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-42662929988679340112015-05-26T20:50:18.475+02:002015-05-26T20:50:18.475+02:00What is or are the definition's of saving that...What is or are the definition's of saving that your using? When you say savings are you always using the same definition? <br /><br />Is the definition of savings that you use the same for people as for organizations. Are people's time counted as some sort of cost of goods sold and subtracted from revenues? You see, labor is taxed on revenue unlike organizations that get to deduct costs. The time invested in the activity is a non tax deductible and non recoverable cost for people. <br /><br />Anonnoreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-74847139513191755432015-05-26T13:53:34.027+02:002015-05-26T13:53:34.027+02:00I agree with you Neil. But the perception is still...I agree with you Neil. But the perception is still that the public debt is the major issue facing the UK; hence economically incompetent governance. <br /><br />Making the write offs explicit may help this.Ari Andricopouloshttps://www.blogger.com/profile/00181838814176635218noreply@blogger.comtag:blogger.com,1999:blog-1513588060557517621.post-25954224709861355162015-05-26T10:25:18.325+02:002015-05-26T10:25:18.325+02:00The central bank is government. It is part of gove...The central bank is government. It is part of government in the same way as the social security departments are. It would struggle to be classified as a Quango. <br /><br />It is explicitly part of government in the UK to the point where it is consolidated into the Whole of Government Accounts. <br /><br />Saying the government should give the government money free of charge is a bit daft. It always gives the government money free of charge when required even under the silly rules we currently have. Look at the latest UK Public sector finance statistics and you can see the government paid out £5.0bn in Interest and immediately received £3.9bn of it back from the QE holding of Gilts.<br /><br />So the majority is already 'interest free'.<br /><br />It doesn't really matter if it is interest free or not. If the interest is mostly saved, then that is just voluntary taxation. Let people count their coins if that excites them. Government should just concern itself with ensuring all real capacity is engaged in production. NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.com