Comment on It will trickle down any second now

• InternetCitizen2@lemmy.world ⁨1⁩ ⁨week⁩ ago

  . Which means that for all practical purposes equities are equivalent to real money.

  I mean, all money is a social contract, but still; equities being close to cash is not the same as being cash. Similar idea to holding a collectable item with some value. Until you sell or use it as collateral the value is hypothetical.

  But when it comes to measuring the success of any country’s economy, we don’t caveat it with something similar.

  Except that we do caveat. The ultimate question is how healthy is the economy or how insert question is the economy; which is non-trivial, mostly because things that we agree should be measured cannot be, so we take a proxy. At this point its worth pointing out that metrics that are used as targets stop being useful metrics.

  Part of how we might agree to measure the economy is by items made; which is hard without considering all the intermittent steps. So the final amount bought by consumers (which could be people, business, foreigners, or the government). Some caveats here are that the data is not normalized by currency, costs of living, people that are served by said economy, velocity of money (search this one as it is somewhat relevant to what you might be asking), and so on. Keep in mind we did not mesure economic health or performance, just something we might find easier to tabulate which may help us infer other things. When making an inference it is important to list out assumptions made about the dataset.

  Still, this is a different topic from “is billionaire wealth real”.

  The success of American economy is heavily reliant on these unrealised gains compared

  I mean I am not even sure what this means. It just reads like a non-statment that sounds good. Having better banking and financing will be better for an economy. Like there is a reason why we moved away from cash/gold to keep things going. Think of how long it might take to buy a house if you are going cash. It is faster to just get a loan. And everyone in that chain can spend their money sooner (velocity of money I said earlier).

  Does China have a less developed equity market? Maybe, but that does not mean that they are a weaker economy. Just that some transactions might take more time.

  Remember we cannot actually measure some questions we have, just take a proxy measurement. Take for example brain damage from football or boxing. As of this writing we cannot see the CTE, but we can take symptoms to build a case that someone might have CTE. We can build a similar story for how resilient or not any given economy in the world might be. So yeah we do caveat quite a lot.

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  • Saarth@lemmy.world ⁨1⁩ ⁨week⁩ ago

    Thanks for the detailed response, I’ll probably need to Google a bunch if stuff in here which I will.

    But to the point that didn’t make sense to you: The american economy is considered to be big/high growth simply because it’s financial sector is so big. And yes this could mean it’s markets are efficient, but efficient at what? Often it’s trading stocks or debt instruments or some obscure financial instruments, and if that’s the case then the size of the economy seems quite made up just like Elon’s wealth.

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    • InternetCitizen2@lemmy.world ⁨1⁩ ⁨week⁩ ago

      but efficient at what?

      A real economics discussion should state this in the thesis. A politician might just state it and leave the reader to make up their own conclusion the way a movie never shows the monster.

      Elon, and all other billionaire, wealth is for sure inflated even in the academic discussion of leverage or whatever, and yes taking out loans should be considered realizing its value and be taxed.

      To be clear, I am not a capitalist or trying to be an apologist for it. Just trying to answer a question about the world we live in and the systems that make it and that we interact with.

      Is the following a pipe or a representation of one? Is the share money? What about the GDP.

      Image

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      • Saarth@lemmy.world ⁨1⁩ ⁨week⁩ ago

        Yeah i guess when you stop looking at GDP as a real fact about the real world, then it makes more sense. That’s funny 😂

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• Saarth@lemmy.world ⁨1⁩ ⁨week⁩ ago

  And my second issue is that when it comes to personal wealth of billionaires we always caveat it with ‘it’s not real money’. .

  But when it comes to measuring the success of any country’s economy, we don’t caveat it with something similar. Countries like Singapore or even US make a lot of money from financial services. The success of American economy is heavily reliant on these unrealised gains compared to China for example where I am guessing it will be a smaller proportion of the total economy.

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