A headline today said that 45% of the world’s wealth has disappeared in the recent economic storm. But is this really true?
It depends on how you define wealth.
No one has destroyed any gold bars. The semiconductor plants are still operating. Barring soil erosion, farms can still grow food. Snow still falls, generating water and electricity for our use.
Is the wealth in the numbers on paper? Are they real, tangible assets?
I’d argue that true wealth is in tangible assets. It’s sheep in the fields, hay in the barn, clothes on your back. It’s real, physical things. In real terms, the wealth of the world is not down.
The only downside is that to convert some of those assets into usable currency, you need value. Harvesting hay costs fuel, which we have to buy.
Those whose wealth and livelihoods depend on phantom dollars on paper growing in value unrelated to real, tangible assets, are indeed in trouble. Those who maintain a connection to real, physical assets are not nearly as disadvantaged.
If you want to help yourself through this crisis, start creating tangible assets. Plant a garden. Keep a few chickens for eggs. Sew one item of clothing for yourself. Generate real wealth, and you can wait out the doomsayers bemoaning the loss of their paper profits.