19 February 2017

Our Comic Book President

It's said that Kim Jong-Don doesn't want to read, i.e. text, the documents he gets. He likes pictures and maps. Sorta the "Classics Illustrated" approach. Just only pictures.

Well, here's a picture that explains why the right wing, trickle down, approach to macro-economic policy just never does anything more than making the rich yet richer.
(By Waliapreeti (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons)

You don't need to be a mathlete to see that the marginal propensity to consume decreases with income. IOW, if you're already rich, giving you more moolah means you'll just sit on it and not increase aggregate demand in the macro-economy. That asymptote problem, yet again. Most likely, as your rich cabal does, you'll just chase Treasuries. The result of that will reduce yet more the received interest rate. And, of course, you and the rest of the cabal will demand that the damn gummint raise the rate on Treasuries to something you can live on, say, 10%. The problem, of course, is that even if Treasury did sell instruments at a nominal rate of 10% (they can do that now if the wanted to, by the way), rather than at auction, the secondary market would immediately drive down the rate to meet the demand reflected by The Giant Pool of Money, which grows ever larger. So, we'd get a transparent re-distribution of moolah from taxpayers to fat cats. Fat cats would rather their transgression be less obvious.

May be we can rename Kim Jong-Don yet again, to Robin Hoodlum? Take from the poor and give to the rich!

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