Question about GDP vs total wealth - Politics and Economics

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Question about GDP vs total wealth

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02-16-2019 , 09:55 PM

archimedes11

adept

Join Date: Jan 2011 Posts: 1,135

If United States GDP is ~$19.4 trillion, but total wealth in the U.S. (total capital, i.e. land + assets) is ~$107 trillion, does that mean that:

1. most of the total wealth in the country is not being utilized?
2. If #1 is true, then this is a result of massive wealth inequality?

02-16-2019 , 10:46 PM

awval999

Election Monitor.

Join Date: Mar 2005 Posts: 6,269

Those numbers have nothing to do with one another.

GDP is an annual measure of the market value of goods and services in the country. Most of the goods and services are consumed. Leaving no lasting value of net worth. For example: food, entertainment, health care.

Total wealth is lasting value, such as real estate, stocks, bonds, gold, cash.

02-17-2019 , 12:31 AM

archimedes11

adept

Join Date: Jan 2011 Posts: 1,135

Quote:

Originally Posted by awval999

That's a bizarre definition of "wealth" if it includes bonds and equity, since their value fluctuates. In other words, it's not really wealth if it can vanish the moment the market crashes. I take your point about the difference between wealth and output, and it makes sense. But I think of wealth as more tangible stuff like land and solid capital assets.

02-17-2019 , 12:53 AM

campfirewest

Carpal \'Tunnel

Join Date: Sep 2006 Posts: 9,934

Quote:

Originally Posted by archimedes11

No, wealth includes assets that can fluctuate wildly.

02-17-2019 , 11:04 AM

BoredSocial

Pooh-Bah

Join Date: Mar 2009 Posts: 5,018

Yeah it's important to realize that it's 107T at today's market value. IRL if you tried to liquidate it all you'd be lucky to get 50% of that... And that would still require the government to print a bunch of money and lend it to the person buying from you.

02-17-2019 , 02:43 PM

hobbes9324

veteran

Join Date: Mar 2005 Posts: 2,872

Quote:

Originally Posted by archimedes11

Huh?

Outside of my house, pretty much all my "wealth" is in my pension. I promise you that I consider it real. I mean, I understand that the value goes up and down, but in the society we live in you have to assume that overall the stuff will hold value, or you're back to hiding gold bars in the basement and taking chickens in payment. Seems less than optimal, although a plate of fried chicken sounds good right now.

MM MD

02-18-2019 , 08:50 PM

archimedes11

adept

Join Date: Jan 2011 Posts: 1,135

Quote:

Originally Posted by hobbes9324

Huh?

Outside of my house, pretty much all my "wealth" is in my pension. I promise you that I consider it real. I mean, I understand that the value goes up and down, but in the society we live in you have to assume that overall the stuff will hold value, or you're back to hiding gold bars in the basement and taking chickens in payment. Seems less than optimal, although a plate of fried chicken sounds good right now.

MM MD

I hate to break it to you, but depending on how old you are right now, there's a fairly high chance that you won't get everything you've been promised. Barring comprehensive reform, pension schemes in the US and Canada will be grossly underfunded by the time us Millenials go to retire.

02-18-2019 , 09:00 PM

iamnotawerewolf

Carpal \'Tunnel

Join Date: Jul 2011 Posts: 31,482

Quote:

Originally Posted by archimedes11

what would it mean if Wealth was < GDP?

if we create more than we keep

Spoiler:

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