This is incredibly worrying. Is there a specific bubble that we aren't aware of that is causing this incredible jump in concentrated wealth? As the author mentioned, it could be the unprecedented monetary stimulus that we have had through quantitative easing. I think this is yet another warning sign that we are overvaluing the American market. The scary thing is that these numbers are WORLDWIDE, so that there is a chance of another worldwide financial crisis.
Is there any way that we can track markets that may be overvalued? As the author here notes, the stock market has soared to new levels. But this represents OVERALL whether an economy is valued highly, not whether an industry is. I think the value of tech companies like Google or Facebook is highly overvalued, so I could see somewhat of a second "dot-com" bust happening. My problem with these companies is that they aren't a traditional source of revenue. They provide services that many use, but generally are both free. It is worth being said that Google and Facebook are able to make lots of money via advertising, but still they don't provide a direct service or good that can be paid for. They are more "enabling" mechanisms that allow consumers and producers to connect easier (via web searches, "friending," etc.) The fact that both companies both have soaring stocks reveals, at least nominally, that the public has tremendous faith in their value and their ability to innovate. It seems to me to be an area that is overvalued and that could easily "crash" if consumers lose confidence in the tech industries.
With history showing that exceedingly high wealth income ratios trigger recessions, the current wealth income ratio is incredibly worrisome. Like Bret mentioned, I think that it is absolutely possible that there’s some sort of bubble that has yet to acknowledge that’s causing all this. But I also just think that wealth in today’s current economy simply grows so much faster than disposable income. It reminds of a saying. The saying goes something like, “it’s the first million that’s hard, after that it’s easy.” It’s gotten to the point where it so easy for the wealthy to accumulate even more wealth. This is worrisome because it has reached a point where “the richest 1 percent in the world own 48 percent of all the world’s wealth.” With a fixed amount of total income, and with most of it going to those who are already rich, there is a great chance for another recession. Therefore, I don’t think that this ratio is something to take lightly.
To know that the wealth tends to grow more quickly than income, leading to dangerous imbalances, it truly made me feel worried. "Before the dot-com and housing bubbles burst, there was six times as much wealth as income," if the housing bubbles did burst, who could imagine how many times as much wealth as income? Companies are so stingy with workers even though they are sitting on a pile of cash. Corporate is too greedy and that even widen the income gap. Unless the wealth was less greedy, things could have been changed. But I did not think that could ever happen.
This is incredibly worrying. Is there a specific bubble that we aren't aware of that is causing this incredible jump in concentrated wealth? As the author mentioned, it could be the unprecedented monetary stimulus that we have had through quantitative easing. I think this is yet another warning sign that we are overvaluing the American market. The scary thing is that these numbers are WORLDWIDE, so that there is a chance of another worldwide financial crisis.
ReplyDeleteIs there any way that we can track markets that may be overvalued? As the author here notes, the stock market has soared to new levels. But this represents OVERALL whether an economy is valued highly, not whether an industry is. I think the value of tech companies like Google or Facebook is highly overvalued, so I could see somewhat of a second "dot-com" bust happening. My problem with these companies is that they aren't a traditional source of revenue. They provide services that many use, but generally are both free. It is worth being said that Google and Facebook are able to make lots of money via advertising, but still they don't provide a direct service or good that can be paid for. They are more "enabling" mechanisms that allow consumers and producers to connect easier (via web searches, "friending," etc.) The fact that both companies both have soaring stocks reveals, at least nominally, that the public has tremendous faith in their value and their ability to innovate. It seems to me to be an area that is overvalued and that could easily "crash" if consumers lose confidence in the tech industries.
With history showing that exceedingly high wealth income ratios trigger recessions, the current wealth income ratio is incredibly worrisome. Like Bret mentioned, I think that it is absolutely possible that there’s some sort of bubble that has yet to acknowledge that’s causing all this. But I also just think that wealth in today’s current economy simply grows so much faster than disposable income. It reminds of a saying. The saying goes something like, “it’s the first million that’s hard, after that it’s easy.” It’s gotten to the point where it so easy for the wealthy to accumulate even more wealth. This is worrisome because it has reached a point where “the richest 1 percent in the world own 48 percent of all the world’s wealth.” With a fixed amount of total income, and with most of it going to those who are already rich, there is a great chance for another recession. Therefore, I don’t think that this ratio is something to take lightly.
ReplyDeleteTo know that the wealth tends to grow more quickly than income, leading to dangerous imbalances, it truly made me feel worried. "Before the dot-com and housing bubbles burst, there was six times as much wealth as income," if the housing bubbles did burst, who could imagine how many times as much wealth as income? Companies are so stingy with workers even though they are sitting on a pile of cash. Corporate is too greedy and that even widen the income gap. Unless the wealth was less greedy, things could have been changed. But I did not think that could ever happen.
ReplyDelete