Dee's skill in delineating loss and desire saves this extremely well-written book from its less successful attempts to skewer our material culture.
This is determined by both potential growth, and a bunch of other factors like risk aversion and desired saving.
Other things equal, such a shift in the income distribution will reduce demand and require a lower real interest rate to match desired saving with desired investment.
Desired saving and desired investment balanced through the magic of Wall Street wizardry and everyone made out like bandits until the world nearly ended.
Now, the Fed is trying to balance desired saving and desired investment once again, but it is finding it difficult to do.
There is much more desired saving in the economy than desired investment, such that the appetite for government debt is high even when the real return on that debt is zero or negative.
Naturally, these unintended results will lead to further changes in behavior, with firms cutting production and consumers further reducing spending, until we eventually reach a sort of equilibrium in which desired saving and desired investment match up; this new equilibrium need not be one in which investment rises, and could well be one in which investment falls.
It's basically the notion that the interest rate is wrong — that given the overhang of debt and other factors depressing private demand, real interest rates would have to be deeply negative to match desired saving with desired investment at full employment.
Wicksell was a pre-Keynesian macro theorist who offered a way to think about booms and slumps in terms of the difference between the market rate of interest and the "natural" rate, defined as the rate that would match desired saving and desired investment at full employment; there's a boom when the market rate is below the natural rate, a slum when the reverse is true.
Use the old trim, if desired, saved from the old door frame, or install new trim to match your new door.
