JP Morgan Admits Trickle Down Economics Has Completely Failed

[kpete]

Remember how the country was sold the idea of “trickle down” economics? “Oh, if we just give the wealthy more, they will create wealth for the poor and middle classes by increasing spending, investing in new factories, hiring more workers, etc, etc, etc.” In reality, after over 30 years of trickle down, or “supply side” economics, we are looking at just the opposite: the rich have gotten richer, and middle class incomes have stagnated. Now, even some in the financial community are admitting that trickle down economics is a failure.

According to an April 17 story on Bloomberg.com,

While the wealth of American households has jumped more than $25 trillion since early 2009 amid rising equity and home prices, the pass-through to consumer spending is lagging the $1 trillion fillip that would have been anticipated historically, according to Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York.

Feroli’s numbers show that since the end of the recession, households have spent only 1.7¢ of each extra dollar they earned in wealth. That compares to an average of 3.8¢ for the years from 1952 to 2009. Simon Kennedy, the author of the Bloomberg story, offers a possible explanation for the difference:

One reason for the adjustment may be that those enjoying gains in wealth are already rich, so have less propensity to increase spending incrementally.

That’s a polite way of saying, “The rich are getting richer, but they already have everything they want and need, so they’re not spending much of their new wealth.”

http://www.bloomberg.com/news/2014-04-17/wealth-effect-failing-to-move-wealthy-to-spend.html

[Spider Jerusalem]

1. "Trickle-down" never worked in the first place, and the whole thing was always bogus.

We've known that for decades now:

11/10/81
Atlantic Monthly publishes William Greider's article "The Education of David Stockman", in which the Budget Director: · Admits "None of us really understands what's going on with all these numbers" · Acknowledges that supply-side economics "was always a Trojan horse to bring down the top rate" · Says of the Reagan tax bill "Do you realize the greed that came to the forefront? The hogs were really feeding." President Reagan is unaware of the article until brought to his attention at his fifth press conference by Leslie Stahl.

http://www.quickchange.com/reagan/1981.html

[rocktivity]

2. Rocktivity Admitted Trickle Down Economics Was MEANT To Fail

Because It Was Meant To Help Only The Tricklers

...and she figured that out the day Reagan introduced it.


rocktivity

[CanonRay]

3. Trickle Down worked just fine

if you're in the 1%, which is probably what was intended in the first place.

[Octafish]

4. They're catching on?

Tax Them.

[Generic Brad]

5. Trickle down economics works exactly as planned

But it works nothing like advertised.

[SevenSixtyTwo]

6. Honest question

Do you think the outcome was Reagan's intention all along or was he duped by far right economists. In theory it sounds good but in reality even I knew it was BS.

[DirkGently]

7. Did anyone ever think it was working?

[Scuba]

8. I wish the wealthy would quit buying politicians!

[MisterP]

9. they admitted it was a Powellite plot in *1981*--and yet since then our only electoral

choices are austerians vs. neoliberals (with some argument over whether Mexicans, women, and gays are human or not to keep the voters hostages)

http://www.theatlantic.com/magazine/archive/1981/12/the-education-of-david-stockman/305760/