If America borrows 100% of its wealth..

lostinrates

Generali wrote: »

Monkfish often posts quotations from 'wires', that is information that is sold to a particular professional set. It's very informative and interesting if you understand the jargon and the ideas behind what is being said.

I'm sure you could post an Estate Agent's description of a farm that would equally leave Monkfish flummoxed. It doesn't make one of you brighter or better than the other, you just have different areas of expertise.

Sure, but I think that a ...deciphering sentence might help new posters take part a bit more. (a theme of today).

ETA: infact I went mad deleting posts that were applicable to an area of my diverse and challenging epertise later: I decided i wasn't worth the both and noone would listen anyway and it would start a row! Maybe Monkfish feels the same!

Mr_Matey

Friday afternoon so I thought I'd join in the finite wealth discussion.

Some wealth can not be quantified no matter how hard people try. Even things such as land. How much is the Amazon worth?
1) Lumber prices?
2) The amount people would pay to preserve it
3) Whatever the going rate for Carbon offsets is
4) Whatever scientific/medical value can be gained from it
5) Tourist revenue
6) Some combination of the above (or others)

Similarly you could ask this of culture. What's the Eiffel Tower worth to France, the Great Wall to China, the Mona Lisa to... Lisa? If humans can create things of incalcuable wealth then surely wealth isn't finite.

Resources. Most people would say they're finite. What about renewables? What if we make our way to other planets in the future?

Then of course there are the non-economic aspects of wealth.

Anyone else feel like philosophising?

lostinrates

Fantastic Mr Matey, thank you!

Mr_Matey

No worries
Is it beer-o-clock yet?

lostinrates

Mr_Matey wrote: »

No worries
Is it beer-o-clock yet?

Not for me, have to drive to the station later.

Mr_Mumble

lostinrates wrote: »

Hmm, so I got the wrong end of the stick? I could have sworn they said wealth, but I've etremely pleased I'm wrong. My poor broken head was struggling more than usual to try and understand...the un-understandable.

I just watched the snippet on iplayer, you didn't hear wrong, Portillo did say wealth.

Taken straight from a modern best-selling economics textbook:

The term wealth is used to refer to the total of all stores of value, including both money and nonmonetary assets.

based on this definition Portillo is using the term "wealth" incorrectly. Portillo is talking about Gross Domestic Product ( GDP for the US in 2008 was $14.3tn which is nearly 25% of the world's $60.7tn). GDP is more analogous with yearly earnings (+profits + rent + interest) than it is with wealth which measures stores of value (e.g. property, shares, commodities, bonds, savings deposits).

While Portillo is wrong using today's accepted definition of wealth he may have been, confusingly, using the classical term used by Adam Smith back in 1776 in "The Wealth of Nations":

real wealth, the annual produce of the land and labour of the society.

Effectively this is GDP.

This may sound like a semantic discussion but the Lib Dems proposal on a new property tax shows its real world importance. Some detractors of Vince Cable's suggestion used an example of an elderly widow living in a million pound property in London who was on a meagre income, perhaps just the guaranteed pension credit of around £140 per week. Is this theoretical pensioner well-off? I'd suggest the vast majority would consider her wealthy but Portillo, based on his his usage of the word "wealth", would not.

lostinrates

Mr_Mumble wrote: »

I just watched the snippet on iplayer, you didn't hear wrong, Portillo did say wealth..

How lovely you are to save me from further self flagellation over my hearing at least.

Its the end of the day and I'm tired, so I'm going to read the rest again before responding to it.

Its made my day to have some really thought provoking discussion.

edit:

Ok, on a re read I love Mr Mumbles post.

I love semantics, and always find it interesting when thigs are dismissed due to semantics, because the misuse or evolution of language can be so very revealing.

kabayiri

To me, the notion of wealth is tightly bound to the concept of 'trust'.

Foreign creditors will lend this country money if they trust in our ability to repay it back, and not try to deflate away the value of that money.

Unfunded pension liabilities rely on the implicit trust that the status quo will continue in the future; namely that future generations will take on their share of the burden without renegeing on the deal.

Funded pension systems rely on significantly vast sums to generate significant return through buying power. In this, they trust contributors to continue making the payments to these funds.

And this is where the real problems lie....
- take pensions; in just 30 minutes the Tonight program highlighted the story of several people whose retirement dreams had been shattered. Some of these were purely the victims of unfortunate timing; the market fall eroding the value of their pot at just the wrong time.

There will be people who watch this who will question their faith and trust in the private pension system. If it failed for others, why would it work for you....once you lose the faith of the current younger generation in saving for the future, it becomes very hard to get this back.

Personally, I dont trust that the state will respect and protect any wealth I have accumulated. If you have money it will be seen as 'fair game' for increased taxation, to pay off our debt burden. Rich people have long since realised the intrinsic value in having offshore savings accounts hiding their true assets...we should watch and learn.

I trust my views will be shot down in flames

Generali

For me, wealth is all the things that can be used to create GDP by people. GDP is the income that flows from a country's wealth and people.

I realise that it's not the definition that everyone one else uses but I like it.