Depressing quote of the week

Last week the Federal Reserve released the results of the latest Survey of Consumer Finances, a triennial report on the assets and liabilities of American households. The bottom line is that there has been basically no wealth creation at all since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001. Paul Krugman

Well that sucks.

7 Comments

  1. Ian

    Just wait. It will trickle down any day now.

  2. Ted

    is that even possible? I never studied economics, but someone please enlighten me. It seems to me that money, like energy, is subject to laws of conservation, meaning that the total amount of money in the world never changes… only the location and flow does.

    so does this just mean that the net worth of the collective nations other than the US has increased?

  3. Sheepywoman

    Yes

  4. Chris

    It seems to me that money, like energy, is subject to laws of conservation, meaning that the total amount of money in the world never changes

    The total amount of wealth in the world should increase as more things are produced whether it be food, cars or software.

  5. Ted

    Chris that doesn’t make sense to me… because the food, cars and software each have an assoiated cost. so where something is created, something is destroyed.

    the total amount never changes, only the distribution of wealth and the velocity of exchanges.

  6. Ian

    Ted, I’m no economist, but I know there isn’t really a standard backing our money (no gold standard). Its value is basically what other countries think it is worth. If you think about it, our national debt should make our money worth less than the paper it is printed on. When Clinton came and talked at NCSU, he phrased it that when our financial crisis hit, 1/4 of all the wealth in the world disappeared (more like we realized it never existed). I think wealth can just be created and destroyed.

  7. Chris

    Ted,
    When something like a car is created, the wealth of the world increases as long as it’s worth more than what went into it. Which makes sense if you think about it. A car is just a bunch of rubber and steel, which are worth a lot less as raw materials.