Where Does The "Wealth Effect" Go?

Tyler Durden's picture

The Bernank confirmed, in almost perfect hypocrisy to his previous implied comments, that the Fed is not targeting some asset price appreciation but no matter which way you look at it - the 'wealth' effect is an easy concept to comprehend as levered unrealized gains are seen as disposable income. However, as we have pointed out many times, the 'wealth' effect only helps an already wealthy few and as BofAML notes today, spending across income groups is extremely disparate reflecting the 'spending gap' in our aggregately stimulated economy. It is quite intuitive that those with more income will be able to spend more. The top 20% of the income distribution make up nearly 40% of total consumer spending. The spending gap is the most extreme for apparel and services and the least for healthcare and food. Lower income households, unsurprisingly, allocate a larger share of their budget toward necessary items. When will the trickle begin...


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kill switch's picture

Where Does The "Wealth Effect" Go?


Where the fuck do you think?

francis_sawyer's picture

jewish banking families?... [I'm grasping at straws here]...

kaiserhoff's picture

When will the trickle begin...

I trickled about an hour ago.  Does that help?

OH.  Never mind.

Croesus's picture

It seems to go to everybody except the people who need it most.


otto skorzeny's picture

francis-one of your favorite Jewish AIPAC lackey congressman carl levin and that crazy motherfucker Zionist john mccain are urging O to bomb Syria to honor their Israeli masters' request

francis_sawyer's picture

Shit ~ & here I'm spending all my efforts just to keep Feinstein's hands off my guns & Bloomberg's hands off my Big Gulp...

Agent P's picture

It ain't called the "Poor Effect" for a reason.

Danks18's picture

More important apparantly:  How's your bracket doing?

SafelyGraze's picture


that's one helluva final four

world championship brackets are here 

PAWNMAN's picture

What about the masses who don't own stocks or a home? How does Big Ben's "wealth effect" help them? Their gift from this criminal is inflation which only does harm.

Vashta Nerada's picture

Based on his wealth effect comments, I'm convinced that Ben believes we are in a massive deflationary depression, and that he can somehow print with impunity forever. The problem with his theory is that the end result of his printing is at best Japan on a global scale, or else hyperinflation beyond Weimar.

Dr Benway's picture

The people owning property and stocks implemented laws that benefited this majority at the expense of people not owning these assets, including the unborn. This is the story of the twin asset bubbles of the late 20th century across the western world. A majority realized it could pass laws for short term benefit, at the long term expense of the minority.

kill switch's picture

The wealth effect goes...

MSM Do you know what you are really watching,,.... THE DELUSION




AldoHux_IV's picture

The "War on Deflation" like the "War on Terror": everyone's a loser except those above/creating the "laws"

bank guy in Brussels's picture

Jim Sinclair re Bernanke and Lagarde ...

Sinclair says that Bernanke talked about leaving the Fed, because the Cyprus stupidity by the EU and IMF basically blew up all of Bernanke's work

Sinclair says that is also why the police raided Lagarde's apartment, to show her she was being put down

According to Sinclair the whole point of QE to infinity was to float the global Ponzi for as long as possible ... but that involves pretending banks are 'bailed out' and absolutely requires depositors to feel safe

Sinclair says last weekend with Cyprus was really Lehman Brothers Part 2, and the IMF and EU have blown up the world

Bernanke saw now that his whole QE fix will crash and burn, because the banks won't be trusted now. The end is in sight, and so he informally declared he was leaving, washing his hands of it ... the whole QE Ponzi depended on no one breaking the mystique

And the idiots Christine Lagarde, the Dutch and the Germans etc blew all that up ... Lagarde was given a personal message with the raid on her home to match


Clowns on Acid's picture

bg in B - very credible story. But Bernank had to know it was failing before Cyprus blow up. Bernank must have been looking to lay the blame onto someone else's back.

Rather than Adam Smith's "invisible hand", LaGarde got the "invisible fisting" from the banking cartel.

ekm's picture

Agree. Elite infighting.

It has to crash. Supply chains of food and energy are broken, IMO.


Obama is in the same condition as Bush in 2008, IMO.

A collapsed economy due to artificial scarcity of crude oil.

Something's gotta give. They are killing each other now.

ekm's picture

Lehman was a setup. This is a setup.


I agree with Sinclair, but I do not think it's a mistake, it's simply a setup, it's a way to crash the system by blaming somebody else.


Let's see.

e-recep's picture

i am with sinclair. the top brass is in panic mode. bringing down the system is not to their benefit.

falak pema's picture

IF there is one thing I have repeated here on ZH it is this : When thieves fall out...

its been there right from beginning with the Merkel-Geithner/Draghi stand off, where Sarko would help persuade Merkel to water down her intransigence.; back in 2011-2012.

Statist Oligarchs vs the Us private Oligarchy, and in this game with so many balls in the air it all had to come to someone bungling the juggling act.

That is why Geithner was so often in Germany to convince Merkel to keep the boat on even keel and not trip up Draghi play, especially during Greek crisis.

One fact may have escaped the ZH forum : As long as Sarko was there Geithner had an ally in France on same page as Pax Americana. WIth Hollande its not so efficient. France is absent to breathe down Merkel's neck like Sarko did.

Hollande vacillates and plays Club Med against Merkel, something Sarko never did! 

Now Hollande has gone neutral since his Mali caper, which has mobilised all his foreign policy resources, and he did not arbitrate between Merkel and the Cypriots to avoid this incredible botched deal over the week end; France failed its go-between role in the core group.

And this thing is now in crisis mode as German hubris wants to make Cyprus a test case. Merkel did not see the danger of this tuff arm play! Cyprus now the Achilles heal.

tony bonn's picture

the trickle down effect is modern nazi speak for lazarus' crumbs......

Racer's picture

It already is trickling down... coloured yellow

lolmao500's picture

Highest costs are always HOUSING/SERVICES then TRANSPORT then FOOD... then if you have money left... ENTERTAINMENT... health care... don't have money for that.

q99x2's picture

Right, and the rich are such tight wads they always think they spend too much money and aren't going to spend anymore anyhow. I once knew a lady that took care of the heir to the Mann estate. Ms.Mann would not turn on the heat in her house and never left a light on in a room she wasn't in. Her money left her in the cold. I tried to get a Getty to buy webcams for me once and she complained about the price. Those F'Kers have a deep inborn sickness when it comes to money. Giving money to the wealthy doesn't do a damn thing for anyone and only makes wealthy sicker.

gwar5's picture

Clothes and entertainment. Looking good and feeling good. Sounds about right.



"Looking gooood, Billy Ray!"

"Feeeeling good, Louis!"

                     --Trading Places, 1983

ziggy59's picture

Answer... Somewhere over the rainbow

Herdee's picture

I've always believed that these slimeballs running the EU were a big danger to the United States monetary system.Now they have the nerve to try to negotiate a free trade deal with Canada(Merkel was just in Ottawa),and now they want to go ahead with a free trade deal with the U.S. What is the motive of these bums that have bankrupted a whole continent?

Downtoolong's picture

When will the trickle begin...

I can feel it now, running down my pantleg.


Dr. Engali's picture

Speaking of the Bernank... I was watching CNBS the other day and Kernen called him "the Bernank", so you know Kernen has been lurking around the Hedge. He is probably the serial junker who goes apeshit when people start putting down Quick or Buttiromo.

slightlyskeptical's picture

Will have to go out of my way  to start bashing  Whacko Joe. He's actually too smart to spout the crap he does. Maria and Becky not so much, so they get a pass to  a certian degree.

Tijuana Donkey Show's picture

You know that MDB is Kramer, right? He tests material here, and if he gets enough junks, he puts it on the air.  Also, good to see you back Dr!

ejhickey's picture

i don't care how much my house goes up in value or how much paper profits i have in my stocks, i can't and won't spend money that is not in my pocket.

chistletoe's picture

just a note you may have missed ...


Not only do the poor pay a higher percentage of their income on food and medical services

but they pay MORE in ABSOLUTE DOLLARS!


My little town is the cesspool of the region, surrounded by exurbs, mcmansions and gentlemanly farms, it is a rag tag collection of old widows, social security disability misfits, heroin addicts and other veterans, and casual laborers.  There are five "restuarants" in town.  four of them specialize in making, and delivering, pizza ... average cost of a dinner for two in this town is $30.  Many of these people have no health insurance.  A ride in an ambulance costs at LEAST $500.  If they have a fever or persistent cough, they head for the ER where the bill can easily mount up to the thousands.


and if they have any money left over, they spend itall  on the lottery ....

DirtyHowi's picture

"when will the trickle begin"


There is a saying in the south General,

Don't piss down my back and tell me it raining

Jonah Hex

B2u's picture
Scrooge (1951)

First Collector: At this festive time of year, Mr. Scrooge, it is more than usually desirable that we should make some slight provision for the poor and destitute.
Ebenezer: Are there no prisons?
First Collector: Plenty of prisons.
Ebenezer: And the union workhouses - are they still in operation?
First Collector: They are. I wish I could say they were not.
Ebenezer: Oh, from what you said at first I was afraid that something had happened to stop them in their useful course. I'm very glad to hear it.
First Collector: I don't think you quite understand us, sir. A few of us are endeavoring to buy the poor some meat and drink, and means of warmth.
Ebenezer: Why?

ebworthen's picture

"Hey look, I still have 250 credits in the Wheel of Fortune machine in Vegas, I'm doing pretty well!"


Floodmaster's picture

Mature consumers are less materialistic,the war on deflation is a losing battle.

monad's picture

"You can't break a gold sovereign in half. Better to have a dime." - MWC