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Share the Wealth – June 7, 2018

 
 
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Registered Investment Adviser Caleb Lawrence 

The major averages enter the final hour mixed on little real news, consumer credit comes out after the close. The Saint Louis Fed Financial Stress Index gained 6 basis points to -1.09 last week after a strong showing by the financial markets.

A lot of debate regarding income growth over the last 30-years or so has shown that income growth, adjusted for inflation has basically gone nowhere, hence the substitution of debt that has produced two consecutive bubbles, followed by crashes in 2000 and 2008, and of course the current bubble that continues its debt funded ascendance. Additionally a few income studies looked at the distribution of income gains and found that the vast majority had accrued to the top 10%. Data from the latest World Inequality Report shows that indeed the top 1% captured 27% of total income gains seen from 1980 through 2016, the bottom 50% saw just 12% of the income gains while the next 49% got the rest. Based on other studies on the subject that have crossed my desk most of the remainder ended up in the top quintile.

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