Increasingly, the important boundary between the rich and the poor is not income, but whether or not they own real estate
- Increasingly, the important boundary between the rich and the poor is not income, but whether or not they own real estate
- In this situation, the value of the assets you already have can be increased quickly and you can use leverages to expand your purchasing power
- This causes more regional and intergenerational imbalances
- In a capitalist system where people who already own assets are the easiest to get credit and use real estate to expand credit transactions rather than productivity, inequality could worsen in the coming decades
- For very few people whose share of the population is getting lower, the concentration of land and wealth removes purchasing power and demand from the economy
- Those with the highest marginal propensity to consume fall into a situation where they have to take on more and more debt to maintain their consumption levels
- Without their demand, businesses and banks will collect investments invested in production and reduce productive lending
- After all, I think this dynamic is a key explanation for the long-term recession and the mystery of production lines that have overshadowed developed countries over the past few decades – why technology has not increased productivity as much as it has advanced
