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Reply #3: Written by someone who doesn't have a clue. [View All]

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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 09:13 AM
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3. Written by someone who doesn't have a clue.
Edited on Mon Jan-17-11 09:15 AM by Statistical
Maybe smaller numbers will help.

I open the Bank oF Statistical. Someone deposits $100 into the bank. What is the "worth" of the bank. $0.00.

Why? Because while I have $100 I also have a $100 liability (depositer can withdraw money at anytime). $100 in cash - $100 liability = $0.00 net worth.

Also conflating wealth with GDP is silly. GDP is the aggregate output for one year (think of it as the nation's income). While wealth is the accumulation of assets over time.
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