I’m not exaggerating that a lot, that is fairly concise / full:
The important thing perception is that the ultra-rich are totally different from you and me: they’ve a lot greater saving charges no matter their age. Irrespective of how costly your tastes, there’s a restrict to how a lot you’ll be able to devour, which implies any earnings above that threshold has to get saved. The ultra-rich subsequently spend comparatively small shares of their earnings on items and companies that immediately present jobs and incomes to others, as an alternative accumulating shares, bonds, artwork, trophy actual property, and different belongings.
The ultra-rich want no encouragement to chorus from shopping for items and companies, so any enhance in earnings focus ought to put downward stress on rates of interest. One other manner to take a look at it’s that a rise in earnings focus boosts the demand for monetary belongings, which ought to push up costs and push down yields.
That’s from Matthew Klein’s glorious The Overshoot substack, addressing the driving power behind nearly the whole lot occurring proper now within the financial system and markets.
He appears at some latest analysis that ties collectively demographic change (we’re on our strategy to a world with 30% much less kids by 2100), declining rates of interest and wealth inequality. That is fascinating stuff and Matthew is a extremely good explainer.
He posted this one totally free, I extremely counsel you learn it:
Inequality, Curiosity Charges, Getting old, and the Function of Central Banks (The Overshoot)