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Discussion: (6 comments)

  1. Did anyone say that income inequality did cause the recession? This reeks of straw formed to look like a man.

  2. I was pretty sure I left this comment before, but it has disappeared.

    I didn’t know anyone was saying income inequality was the cause of the economic collapse, just that it stinks and should be rectified.

    1. Irrelevant. The article is about what led to the crash, not who benefited from it.

  3. Nick Bradley

    really old post, but consumption cannot outstrip wage growth without increases in household debt loads. And marginal propensity consume goes down — way down — as income goes up.

    so, you get a much larger pool of savings and investment, and this money then gets loaned to households at a much lower interest rate…but balances go up.

    but as we all (should) know, high balance, low rate situations are extremely sensitive to shocks.

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