Economic growth data does not show how such growth was achieved. Was it based on income growth and consumption spending levels or was it based on borrowings to extend the income levels? The question is vital for deciding which economic tools work best for correcting imbalances. The main...

An Income Gap Theory and it effects on Unemployment and Economic Growth By Drs Kees De Koning Abstract An income gap is often described as the difference in incomes between the rich and poor. This is a relative gap. In economies a different income gap can occur which can be defined as the...

Abstract Debt, equity and income: limits to the freedom of choice in an economy. Three concepts have been introduced in this paper, which help explain the economic developments in the U.S. and the U.K. over the last sixteen years; they are the “income gap”, the “equity gap” and the...

Individual households save out of income by postponing consumption. Such savings are used not only by companies to expand production or by some individual households to increase consumption through borrowings: the economic use of savings. For instance in the U.S. in 2005 and 2006 65.5% of the...

Financial sector companies are different from those in the real sector. In the real sector the price for consumer goods and services is a price reflecting all costs which have been made to produce the output. Profits reflect the difference between the sales price and the costs base. The...

Savings are allocated over the acquisition of assets like homes, shares and bonds and government debt paper. For a home acquisition an individual household uses own equity provided by the buyer and outside equity provided by banks. Such outside equity can help to increase the volume of new...

The U.K.’s recent economic developments can be broken down in two distinct periods. The period 2002-2008 was the period in which economic growth was satisfactory and individual households’ wages and salaries were increasing at a level higher than inflation rates. It was also the period that...

The world’s financial crisis happened in 2008, but the U.S. individual households’ income and savings crisis happened before that: the latter one was already at crisis point in 2005 and 2006. The key of any analysis about the households’ income and savings crisis should start with the...

The real financial crisis in the U.S. and in other countries did not take place in the banking or the wider financial sector -yes banks and others financial institutions were affected by their own induced excessive lending schemes- but no, it seriously affected the individual households. More...

The collective individual households or coin economic theory aims to study how savings have been and are being allocated to the various asset classes and how they are being used. The main conclusion from this study is that some savings can be held in the financial sector and stay there while...