Ones and Tooze The K-Shaped Economy
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May 8, 2026 They explain how the top 10% now account for nearly half of U.S. consumer spending and why that creates a K-shaped economy. They explore how stock gains and inflation hit different groups and whether monetary forces like the Cantillon effect drive divergence. They discuss global comparisons and the political fallout from growing economic splits. The episode also revisits Thatcher’s monetarism, privatization, and long-term consequences.
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Why Monetary Expansion Redistributes Wealth
- The Cantillon effect says new money benefits those who receive it first, so monetary expansion has distributional consequences rather than being neutral.
- Adam Tooze argues current wealth booms are driven more by endogenous credit and sectoral investment (e.g., AI) than simple Cantillon-style money distribution.
K Shape Extends Beyond The United States
- K-shaped dynamics appear globally: developed economies show internal divergence while many fragile emerging markets are on a permanent down-leg.
- Countries like Egypt, Pakistan, Bangladesh, and parts of Africa face chronic stress from shocks, tightened global financing, and commodity shocks.
Disaggregate Data To See Divergent Economies
- Analysts should stop treating headline averages as definitive and instead disaggregate data by income, sector, and region.
- Use sources like bank and retailer card data and trade-category splits (AI imports vs non-AI) to reveal divergent trends.