[PEN-L:29508] Re: Re: Re: Rising stock market redistributes wealth?

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Well, before the market went up your neighbor had $9,999,990 more money (in
this asset) than you did.  Afterwards he has $19,999,9980 more.  I think he
has done better than you have.

Gene

Bill Lear wrote:

> On Thursday, August 15, 2002 at 07:46:14 (-0700) Michael Perelman writes:
> >I would suggest that redistribution is real.  The fictitious capital
> >associated with capital gains through the wealth effect bids up the cost
> >of goods such as housing.  That asset bubble also has real consequences
> >for renters who get displaced.
>
> I still don't get it.  If I have 10 shares of 1 dollar stock and it
> goes up by 1 dollar, I have doubled my money (I mistakenly said
> earlier I had 10 times more money!).  My neighbor with 10 million
> shares has also doubled his money.  The wealth of each of us, purely
> through the stock market, has risen by 100%.
>
> Baker's point seems to be very narrow --- that the rising stock market
> itself "is primarily a redistribution".  If he meant possible
> associated price inflation, why didn't he say that?
>
> Bill