4 ms·

The graph is pretty consistent up until the 1970s (the last 40 years). What the graph does not tell you is that US dollar was no longer pegged to gold after 19

The graph is pretty consistent up until the 1970s (the last 40 years). What the graph does not tell you is that US dollar was no longer pegged to gold after 1971 (Bretton Woods). The currency devalued over time and the wealthy were in diverse asset classes that retained or grew in value over time (such as equities, forex, real estate, etc). The rest of society kept most of their money in cash.

gizmo 13y ago
> The rest of society kept most of their money in cash. Not true. Regular people have most of their wealth in their house and cars. That's if they have net wealth in the first place. (And 401ks and other mutual funds, which is also not cash money). According to the census bureau households(depending on income or asset quintile) have between $200 and $1800 in their checking account. (http://www.census.gov/people/wealth/ http://www.census.gov/people/wealth/)
- velodrome 13y ago
  Sorry, I did generalize quite a bit. But your right, they did not keep their money in cash. Much worse, they converted their excess cash to illiquid and/or depreciating assets. Also, many people do not have access to a 401k: 50.6% of Americans work for an employer that sponsors a retirement savings plan. 40.4% of employees utilized a 401(k) or pension in 2008. http://www.ebri.org/pdf/briefspdf/EBRI_IB_11-2009_No336_Ret-Part.pdf http://www.ebri.org/pdf/briefspdf/EBRI_IB_11-2009_No336_Ret-... If they do have a 401k plan, it really depends what assets you can buy. If the plan offered only allows you to purchase mutual funds with high load and yearly fees, your wealth is being transferred to others. Over time, you will lose money vs the index. There are also penalties for early withdrawals. Also, people are not forced to put money in a 401k or to buy a house or car. They could save that money and do something productive with it. On that link you posted, the wealthy DID NOT have most of their wealth in a 401k, it was in equities, equity in their business, rental properties, and other assets. So, the point I was making was - the wealthy put the money to work for them rather than other way around. Imagine if you had excess money during the 2008 recession, you could have had many opportunities to make money. Most had their money (as you mentioned) tied up in their house or car. So, really it is about the wealthy being in a position to advantage of all available opportunities.

gizmo 13y ago

> The rest of society kept most of their money in cash. Not true. Regular people have most of their wealth in their house and cars. That's if they have net wealth in the first place. (And 401ks and other mutual funds, which is also not cash money). According to the census bureau households(depending on income or asset quintile) have between $200 and $1800 in their checking account. (http://www.census.gov/people/wealth/ http://www.census.gov/people/wealth/)

velodrome 13y ago
Sorry, I did generalize quite a bit. But your right, they did not keep their money in cash. Much worse, they converted their excess cash to illiquid and/or depreciating assets. Also, many people do not have access to a 401k: 50.6% of Americans work for an employer that sponsors a retirement savings plan. 40.4% of employees utilized a 401(k) or pension in 2008. http://www.ebri.org/pdf/briefspdf/EBRI_IB_11-2009_No336_Ret-Part.pdf http://www.ebri.org/pdf/briefspdf/EBRI_IB_11-2009_No336_Ret-... If they do have a 401k plan, it really depends what assets you can buy. If the plan offered only allows you to purchase mutual funds with high load and yearly fees, your wealth is being transferred to others. Over time, you will lose money vs the index. There are also penalties for early withdrawals. Also, people are not forced to put money in a 401k or to buy a house or car. They could save that money and do something productive with it. On that link you posted, the wealthy DID NOT have most of their wealth in a 401k, it was in equities, equity in their business, rental properties, and other assets. So, the point I was making was - the wealthy put the money to work for them rather than other way around. Imagine if you had excess money during the 2008 recession, you could have had many opportunities to make money. Most had their money (as you mentioned) tied up in their house or car. So, really it is about the wealthy being in a position to advantage of all available opportunities.