3 ms·
Why do people keep comparing assets ($) to GDP ($/year)? If you want to compare the two, 1 year isn't a reasonable term. You can convert a rate into a current
by tlb 8y ago
Why do people keep comparing assets ($) to GDP ($/year)?
If you want to compare the two, 1 year isn't a reasonable term. You can convert a rate into a current asset value by multiplying by a P/E ratio, anywhere from 10 to 20 these days.
- Maybestring 8y agoThe distance from LA to New York is bigger than 2000mph!
- cperciva 8y agoNews media love to do this on a personal level too. Every month CBC runs a story about how Canadians' household debt (mostly mortgages) is 170% of their disposable income. It isn't completely meaningless to compare these, but the units need to be right: Rather than "170%" (which scares people because it's more than 100%!) we should say that household debt is equal to 20 months of disposable income.
- mistermann 8y agoBut that is the same thing, which isn't the case in the article.
- ucaetano 8y agoYeah, I'm genuinely surprised and sad when I see posts like these make it to Hacker News, it just show how ignorant most people are about fundamentals of economics.
- logfromblammo 8y agoOne way to compare would be to say that all of Norway could earn as much money, just sitting on ass all day, every day, as 3% (safe withdrawal rate) of Mexico, working 43 hours a week (actual stat from OECD). Alternately, compare to a country with lower GDP. "Norway (5.3M people) makes as much sitting on its investments as Latvia (2M people) earns working 36.5 hours per week." This has the advantage of comparing a Scandinavian country with a Baltic nation, with cultural and geographic proximity.
- barbegal 8y agoMore like 20 to 30 in recent years (or even more if you look at indexes of smaller companies such as the Russell 2000)