Think of it this way: it didn’t exist then, and it doesn’t exist now.
Probably the best way to look at it. Equity values do not represent only actual wealth, they represent the market’s best guess about the value of wealth that will be created in the future. Some real wealth was destroyed last year, but most of that $6.9 trillion figure came as people readjusted unrealistic forecasts that had artificially inflated equity values.
“Think of it this way: it didn’t exist then, and it doesn’t exist now.”
That’s a profound statement and a true one.
People thought the wealth existed, and made plans based on their thoughts. The wealth, however, was an inflationary mirage.
The economic stimulus package hussein intends to enact will set the stage for another inflationary mirage later on. That future one promises to be worse than this present one because it will be combined with all sorts of restraints on market activities (meaning, restraints on individual planning), so the market will never have a chance to readjust and recover. Most people will then demand complete control of all economic activity by the federal government, and the New York Times will publish editorials on how “laissez faire has failed.”