[TeMPOraL]

I'm not referring to Giffen goods, just regular goods. A clarifying example:

I have a favourite brand of tea that I've been drinking for years. I have some disposable income, so even if the price of that tea went up 2x, I wouldn't switch to a cheaper (but less tasty) alternative. But I know people who would, and I lived through period of financial distress during which I'd make such switch. The same applies to quite a lot of other goods I buy: from ketchup and mustard to soap and toilet paper.

The same also applies to the places I shop. I'm already buying most groceries at our local ALDI equivalent, but I could optimize that further - but I don't, because I have disposable income, and I won't - even if the prices go up - until it becomes noticeable enough on my balance sheet to justify the effort.

My hypothesis is the example above, but generalized over population: if an average person has $X of disposable income, the market suddenly loses the downward pressure from demand side to the tune of $X; the pressure resumes once the average person has no disposable income.

I haven't made my mind up on this either, I'm just presenting what I currently believe to be a causal relationship. This is partially based on the experience in European countries (notably Poland and Germany), where double income is increasingly becoming a necessity as well, but we don't have some of the commonly attributed contributory factors like student debt and high healthcare costs.

[md_]

I don't know. That seems oddly zero sum to me (which is why I alluded to it before). It suggests that there never are real productivity gains—in the sense that any resultant wage increases are followed by compensatory inflation.

Yet even if that were true, if we treat this purely as zero sum (and don't account for economic growth), we can still easily look at _distribution_ of wealth and income, and the trends there (as I noted elsewhere), both in the US and the developed world more broadly, are directionally consistent with less income due to labor and a greater role of capital ownership.

I don't think this inflationary argument (which may be valid) would explain why capital ownership would be an increasing share of overall wealth. I tend to think this is better explained by (crudely summarizing) Piketty's thesis that the Kuznets curve is simply wrong, that (unfortunately) war and commensurate economic upheaval is associated with a flattening of inequality, and that the long period of relative growth and stability in the west almost inevitably leads to increasing inequality and a relative weakening of the labor force.