[PEN-L:29533] Re: Re: Rising stock market redistributes wealth?

[Bill Lear <rael@xxxxxxxxxx>]

On Saturday, August 17, 2002 at 06:42:57 (-0700) Gar Lipow writes:
>...
>You are forgetting that the wealthy have more disposable income than the
>rest, and can afford to put more in the stock market.:
>
>So if you have around 9% of your wealth in the Stock Market, (because
>your home, car, household goods, and cash savings constitute most of
>your  asset and Richie Richie has 45% of his wealth in the stock market
>- then when the stock market doubles you will gain around 9% and Richie
>rich will gain by 455 - his ratio of wealth to your wealth increases.
>
>Secondly in a lot of cases stock increases come at the expense of
>decreasing wages or barely increasing wages. At any rate the stock
>market (during a boom) rises a lot  faster than wages. So if wages
>constitute 80% of your income, and wages constitute 1% of richie riches
>income then there is another place where his assets increase faster than
>yours as a percent of base income.
>...

Very well done example, exactly what I was looking for, thanks.


Bill