The Global Pie
Trillions of dollars have been lost in retirement accounts and in the housing market. This is a tragedy. At least, we are led to believe this is a tragedy and truth told I think that people who own homes and now owe more than the home is worth makes them also feel as though they have gotten the worse end of the global economy and housing economy. And yet, this is still all about inflation.
According to this article I came across at Yahoo! News there is a single world pie.
What does this mean? It means that in all of the world at any given moment there is only so much money. This amounts to wealth existing only in proportion to the overall world wealth. The problem with this is that once wealth increases due to inflation (which is natural) over time, and then the markets crash and the value of property and the amount of wealth resets, businesses still want the inflationary amount for property rather than the reset monetary amount. In essence, a $100,000 house can (and in the current economy does) reset to a $60,000 range. The theoretical money is gone and the individual is now less rich; but in turn, that is how the economy works.
This is not an impossible situation to understand. The United States went through the Great Depression after a period of inflationary growth. The government tried a lot of different methods to bring the country out of the depression, but in the end it required a war and massive spending and exporting.
What is happening right now may not lead to a depression. But what is happening is that the economic pie is shrinking, like magic, and people are (theoretically) losing wealth.
John Hattaway | smokingpen | Alicia Grey | Clockwork Princess | Cassandra West
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