Quote:
Originally Posted by Phil P
Squelching investment is exactly what's needed - more is not always better, just like more consumption is not always better. What happens with too much investment is excessive risk; with no interest loans, companies invest in excessively risky projects. This agains leads to potentially higher returns at the expense of risk gyrations.
Look at the recent failures - self driving cars, 5G, We Work, SPAC boom and bust, Crypto, Metaverse etc... Chasing potential productivity gains while ignoring risk leads to unoptimal outcomes as productivity gains relative to risk decrease marginally and these were the bottom of the barrel so to speak. The inequality factor comes in where upper incomes are more protected from gyrations and more likely to package, pass along, and parachute out of the risk than the lower incomes.
Bottom line is the Feds rates have been too low when factoring in risk. U3 was their tinkle down proposition. Even if 1% more are unemployed, that still means 95% still have their job. And some argue that we are actually below functional unemployment now anyways with 5% as a benchmark.
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Adopting a long term constrictive footing in efforts to decrease inequality would be silly and is simply not going to happen.
I think you need to drive the notion out of your head the penalizing and then reducing the size and well success of the success classes would be helpful to those at the bottom.
And while we are playing word games an improved Gini index can happen as an economy goes to hades and the working poor and middle classes are crushed.
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