Excellent summary John, thank you! I particularly like the chart indicating the ridiculously low ratio of real vs financial assets. May I suggest that the unintended consequences for the myriad of policy responses to the pandemic actually resulted in a "war on equality."
I completely agree Clemens. But, as you point out, it is not the inequality of incomes that people write about. It is the fact that some people are asset owners and some people own no assets. The policies since 2008 have all been about driving up asset prices and have done little for paychecks.
Dr. John, I think choosing 2008 as the inflection point for policy on paychecks vs asset prices rather fundamentally diverges from your brilliant historical analysis herein. It seems clear that driving up prices of financial assets has devalued both real assets and paychecks on a comparative basis.
Good point, David. The demise of the paycheck economy has been going on for a long time before 2008. I have written for many years about the link between the factors that made it essentially costless to move capital around the world and the diverging fortunes of the owners and users of capital goods. What accelerated in 2008, and then again in 2020, was the Fed balance sheet expansion that pushed asset prices much higher. As we all know, most people have no meaningful assets, so asset price inflation drives a huge wedge between workers and owners of businesses. We have reaped the political harvest of those events.
Excellent summary John, thank you! I particularly like the chart indicating the ridiculously low ratio of real vs financial assets. May I suggest that the unintended consequences for the myriad of policy responses to the pandemic actually resulted in a "war on equality."
I completely agree Clemens. But, as you point out, it is not the inequality of incomes that people write about. It is the fact that some people are asset owners and some people own no assets. The policies since 2008 have all been about driving up asset prices and have done little for paychecks.
Dr. John, I think choosing 2008 as the inflection point for policy on paychecks vs asset prices rather fundamentally diverges from your brilliant historical analysis herein. It seems clear that driving up prices of financial assets has devalued both real assets and paychecks on a comparative basis.
Good point, David. The demise of the paycheck economy has been going on for a long time before 2008. I have written for many years about the link between the factors that made it essentially costless to move capital around the world and the diverging fortunes of the owners and users of capital goods. What accelerated in 2008, and then again in 2020, was the Fed balance sheet expansion that pushed asset prices much higher. As we all know, most people have no meaningful assets, so asset price inflation drives a huge wedge between workers and owners of businesses. We have reaped the political harvest of those events.