You though you were well off? Wrong
I read Randell Wray’s book, Modern Monetary Theory, and recreated his sectoral balances chart, Figure 1.3 on page 29, The Accounting Identity or Sectoral Balances, for a diary posted a few months back.
The chart is reproduced here:
and then I though.
And wondered can I illustrate what happened between the income and hence wealth accumulation between the wealthy and the not wealthy? My definition of wealthy, for illustration purposes, is those with a Total Income greater than $1 Million, based on IRS Tax statistics.
Yes I can, and now we have this chart:
Nice pretty chart! Not. The sum of the Red and Blue bars for a year is the Private Sector surplus or deficit shown on the Sectoral Balance Chart, so the math is:
Private Sector Balance – >$1 Million Income Income = <$1 Million Portion of Sector Balance.
All numbers % of GDP, and an assumption that Total Income reported to the IRS is a part of GDP.
The blue bars on chart show the private sector with an income of over $1 Million, which has always earned a percentage of GDP much greater than the private sector surplus show in the MMT sectoral balance chart.
Where did the extra income come from for those earning over $1 Million? From the red bars on the chart, the Private Sector earning less than $1 Million!! aka: Rents.
The Private sector earning under $1 Million for the years shown (the years for which I found data), ALWAYS paid the Private sector earning more than One million.
On Edit it’s not correct. It compares apples and oranges. That was my second attempt to tie MMT Sectoral Balances into actual hard data by income band.