Lack of Productive Income Dooms Lack of Demand
Wage growth has not kept pace with overall income, more than
suggesting financial-driven concentration (aided by the increase in
government transfers). In 1979, wages constituted just less than 70% of
DPI; by 1996 it was 61.7% before rebounding in the late 1990’s to almost
67%. By the time the Great Recession began, wages were down to 60% of
DPI, bottoming out under 56%. The proportion has only slightly retraced,
now at 57.3%.
**The net result is exactly what we see today, an economy that
appears to be stuck for a lack of demand. However, that is but a symptom
of the real problem, namely that financialism replaced productive
behavior. ** Now we see the downside of that predicament as serious
stresses in financial channels have disabled the current economy’s
ability to replicate the illusion of stability from the previous
periods. So households outside of the asset inflation channel are left
with this:
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