Big ticket items, homes, cars, durable goods, machinery, etc. etc. eventually fall into disrepair or otherwise deteriorate to the point they no longer have market value. Consumer goods have appreciably lower economic life spans. Perishable goods (food) and disposable items dissipate wealth most rapidly.
Of course, I'm explaining this in terms of personal items that constitute most people's personal wealth. But the same principle holds true for large items owned by businesses and/or government: Buildings, machinery, roads, bridges, etc. etc. etc all eventually degrade (both physically and in value)-- and wealth is dissipated.
So, regardless of whether we're talkin about services or manufactured goods, eventually all wealth is dissipated? Sounds like our standard of living should be continually dropping. It's not so there must be something happening that you're not explaining.
Yes, which is why it is important for an economy to continuously engage in wealth-creating, value-added activities. If these activities exceed the dissipation rate, overall wealth increases. If they do not, overall wealth declines.
Sounds like our standard of living should be continually dropping. It's not so there must be something happening that you're not explaining.
We are in a phase where the illusion of wealth is being propped up through the use of debt. That is the topic of this article. The Trade Deficit is an indicator of how we acquire short-economic-lived consumer goods to maintain this illusion. That deficit returns to haunt us as China purchases our government debt obligations. In the long haul, America will have squandered its wealth and will be obliged to pay taxes simply to pay interest on the debt owed to China, and in turn, receive less government services for the tax dollars we pay.
This situtation is NOT in America's best interests.