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Perhaps there was too much currency in the system, but I think the actual, real wealth of many people did decrease too. They were better off than they are now,
by miloshh 18y ago
Perhaps there was too much currency in the system, but I think the actual, real wealth of many people did decrease too. They were better off than they are now, their wealth physically went down. They don't have things now that they did before. The output of the economy decreased, while the resources stayed roughly the same, so less wealth is being created. This is true even if you completely forget about the existence of money.
- nazgulnarsil 18y agoright, but by necessity most of the wealth that disappeared was involved in non-productive economic activity. The wealth lost that actually was involved in productivity is a side effect of the massive fluctuations in imaginary wealth. If it didn't effect the productive portion of the economy we wouldn't even have to worry about the shenanigans of the fed in the first place. The real effect of this fluctuation is reflected in the fact that america has had an aggregate negative savings rate for the last 10 years. The imaginary wealth made people think that they could spend the real wealth, get returns in imaginary wealth (home valuations for example) and be net ahead.