Articles NewsFlow Gold & Silver Prices Market Briefing

Recevez notre Marketbriefing

In the same category
End of Hoaxes James Howard Kunstler “RFK, Jr. Murders Whale with Chainsaw!” James Howard Kunstler The Significance of the Passage of Time James Howard Kunstler Is Kamala Very Very Afraid? James Howard Kunstler

overtheedge
Member since May 2012
680 commentaries - 6 followers

6 followers

has posted a comment on the article :

Don't Look Now But The Wealth Effect Is Over - Michael Pento - Delta Global Advisors

"The public sector is still greatly in need of deleveraging because Household Debt to GDP ratio is still over 80%, opposed to the 40% it was in 1971. Real disposable income is not increasing, which has left the consumer with little ability to take on more debt. There just isn't any reason to believe that consumers will suddenly ramp-up their borrowing."

Hence another reason behind the desire to raise the minimum wage. Think of this as a trickle-up wage inflation gambit.
Every wage level gets a raise. Low end jobs will decrease in numbers, but these folks aren't borrowing and sure aren't big consumers anyway.
This is about inflating the perception of disposable income (wealth effect) to increase consumer borrowing.

We've had the financial sector bail-outs.
ObamaCare is about bailing out the insurance sector.
Increasing minimum wages is a consumer spending sector bail-out or more correctly a bail-in.
The consumer might use some of the wage increase for debt service for a couple of paychecks, but the desire for luxury has no bounds.
ALL non-essential spending is for luxury goods.

Keep in mind, we are talking about wealth effect.
Economists are talking about it.
Politicians are talking about it.
A consumer-based economy is completely dependent upon the perception of disposable wealth.

Commented 3795 days ago

Send

Beginning of the headline :The government's "ingenious" solution to end the Great Recession was to recreate the same wealth effect that engendered the credit crisis to begin with: The definition of the wealth effect is an increase in spending that comes from an increase in the perception of wealth generated from equities and real estate. Our Treasury and Federal Reserve figured the best way to accomplish this was to rescue the banking system by; taking interest rates to zero percent, buying banks' troubled ass... Read More

Reply to this comment

You must be logged in to comment an article

8000 characters max.

	RSS feed		24hGold Mobile
	Gold Data Center		Gold & Silver Converter
	Gold coins on eBay		Silver coins on eBay
	Technical Analysis		Fundamental Analysis