Explains Plutonomy

Economic growth that is powered & consumed by the wealthiest upper society. Plutonomy refers to a society where all of the wealth is controlled by an ever-shrinking minority; for example the economic growth of that society becomes dependent on the fortunes of that same rich minority.

This buzz word was initially coined by analysts at Citigroup in 2005 to report the wonderful growth of the U.S. economy in the work of that period despite increasing rates of interest, commodity prices & an inflated national debt. Citigroup analysts argued that as such an economy continues to grow in the face of contradictory elements, the more important the society's ultra rich become to maintaining such growth. The analysts also believed that in addition to the Great Britain, China, U.S. and Canada,  are also becoming plutonomies.

Surfing this weekend I happened on some review's of Michael Moore's Capitalism: A Love Story. Reading some of the United Kingdom paper's view of the film, I saw an fascinating reference to an internal 2006 Citigroup memo regarding, America, which has turned in to a contemporary day plutonomy. With the wonders of the internets I could unearth at least part of the document, which frankly much reinforces things that are plainly obvious.

It is widely known that the rich have an outsized influence on the economy.
The nation's top 1% of households own over half the nation's stocks, according to the Federal Reserve. They also control over $16 trillion in wealth - over the bottom 90%.
Yet a brand spanking new body of research from Citigroup suggests that the rich have other, more-surprising impacts on the economy.

Global strategist at Citigroup, & his research team came up with the term Plutonomy in 2005 to report a country that is defined by large income & wealth inequality.

They are all created by disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, immigrants...the rule of law & patenting inventions. Often these wealth waves involve great complexity exploited best by the rich & educated of the time.

There is no average consumer in Plutonomies. There is only the rich and everyone else. The rich account for a disproportionate chunk of the economy, while the non-rich account for surprisingly small bites of the national pie. Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending.

Plutonomies are likely to grow in the future, fed by capitalist-friendly governments, more technology-driven productivity & globalization.