A Plutonomy is an economy that is driven and controlled by an extremely wealthy minority. The word was coined in 2005 by an analyst at Citigroup. According to the laws of Plutonomics, the rich – because they spend a lot of money – make up such a large proportion of national spending that they mess with national spending statistics.

For example, if you asked everyone in the country how much they spend on designer clothes each year, and averaged that number, you would get an inaccurate picture of how well America is dressing. Why? Because one person spending $10,000 a year on couture while 9 other people spend $0 still makes it look like everyone is dropping $1,000 on their “collection” every year.

Tags: Citigroup, economic growth, economic theory, economy, macroeconomics, plutonomy