Arguing with Socioeconomic Insanity

The Huffington Post has a spread on a CNBC story about how the rich are hoarding cash, keeping it from the economy. This is nothing new, and insane that it hasn’t been in the news since, well, ever.

Here’s the M2 Stock and velocity, pegged against the Personal Savings Rate and consumption; by the way, if you cannot see that personal consumption line (a measure of demand in the market), it’s because there is next to no demand for consumption.


Yes, people are “saving” more, presumably the “rich” because of this graph, showing wages dropping as a percent of GDP:

wages to gdp

So there’s lots of cash flowing into the money stock (thank you, FED), and that money isn’t moving beyond the banks, and personal savings isn’t doing much of anything beyond a few anomalous spikes (presumably those rich guys). Wages are way down, so consumption (demand) is way down.

What’s “old” about this (and infinitely more interesting to the argument of insanity)? These are the same graphs that Keynesians use to argue their Aggregate Demand model as the problem with our economy and society; which has historically been proven to be more right than anything else. These are the exact same graphs that disprove the austerity argument (known as sequestration in the States). It’s the exact same graphs that show that increasing the social safety net will help the economy. This has been on the political and economic table since 2009. It’s nothing new!

Maybe, however, a conversation can get started on the politicians denying the facts of mathematics. I’m not sure which is more insane; denying the facts of mathematics that’s making society suffer, or thinking that politicians can really have a conversation about it.

This entry was posted in Demand, Economics, Sociology. Bookmark the permalink.

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