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Re: [Pen-l] Re: Shemano on consumer behavior

ken hanly wrote:
> What about the "broke effect" People do not buy goods
> because they are broke and credit has dried up.
> Aren't we seeing the broke effect right now in the
> world food crisis. The broke effect makes it
> impossible for people to even consume essential
> functional commodities but this will not reflect on
> the efficiency of the economy since the demand of
> broke people is not backed up by purchasing power i.e.
> is not effective demand. The starving consumer exists
> side by side with the infinite consumer. Neither is
> close to extinction.

FWIW, economists call this effect a "liquidity constraint."

-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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