The rich get richer and rates get lower

I wonder if this is an artifact of how they are looking at the savings rate. If you think of someone wealthy like Bezos, he is rich on paper because the value of his shares of Amazon increased. This is not taking any liquidity out of the system. It&#x27;s not &quot;excess savings&quot; because it&#x27;s not income that is being saved.<p>Of course, he isn&#x27;t typical of the top decile, but is typical of the most wealthy. I wonder if this is a bit like Piketty, where the driver was actually real estate appreciation. For the top decile, they are are still putting the most money into real estate, and the prices continue to be bid up. Real estate is where prices are most directly driven by interest rates that allow people to borrow ever more. So maybe their &quot;excess savings&quot; is just bidding up the price of housing.

We have an entity which literally fixes the interest rate through a variety of methods and yet we&#x27;re talking about why rates are the way they are. Boggles the mind.<p>It&#x27;d be like arguing about why rents aren&#x27;t going up in a rent controlled neighborhood. &quot;Because there&#x27;s excess housing and not enough renters&quot; doesn&#x27;t seem to really explain the process.

As long as the real rate of return is positive and wealthy people have a higher income or save a higher percentage of their income, inequality will increase. Hence inequality almost(?) always increases in times of stability. You don&#x27;t need low interest rates to tell that story.

I&#x27;ve thought that the baby boom savings cycle explained most of it, but neat to see some numbers contesting that. But this paper seems to assume that US asset prices are determined entirely by domestic demand which seems wild in a world awash with sovereign wealth funds, pension plans, diversified savers, and emerging market wealth seeking a safe haven.<p>I see some work attributing pensions, etc. to demographic deciles, but ctrl-F &quot;foreign&quot; comes up 0.<p>Does anyone know of any estimates of what fraction of net inflow into US financial assets are domestic vs foreign?

As a millenial with a good chunk of his net worth in property, it seems clear that real estate prices are inflated by the Govt via mortgage rates, and I am super nervous about how this plays out now that they are near zero in conjunction with QE. Nowhere to go but down? Yikes

There is no problem in the rich getting richer, the problem is that we need to smooth the friction for more and more people to grow.

The rich take money out of the system and further entrench their position.