1/4 Three plots of wealth growth under reallocating geometric Brownian motion (RGBM).
Identical parameters, except for the reallocation rate.
100 wealth trajectories shown over 100 years.
Blog post here, if you haven't read it yet
ergodicityeconomics.com/2017/08/14/wea…
Identical parameters, except for the reallocation rate.
100 wealth trajectories shown over 100 years.
Blog post here, if you haven't read it yet
ergodicityeconomics.com/2017/08/14/wea…
2/4 Many people, including many economists and politicians, think that growth always looks like this: a tide that lifts all boats (reallocation rate=5% per year). 
3/4 This is how it looks in the main model of financial mathematics, geometric Brownian motion (reallocation rate=0% per year). Inequality grows indefinitely.
4/4 Finally, this is how it looks in RGBM with negative reallocation. The strange vertical lines are individuals plunging into negative wealth, like debt traps (reallocation rate=-5% per year, not far from the current best-fit value for the US [somewhere between 0% and -3%]).
