Kasz216 on 28 April 2013
| Mnementh said: Well, I have even problems measuring growth in money. That is a problem that lies in the root of it. scenario 1: If prices drop people can spend their money on more things. The wealth is increasing - but as the same amount of money is spended, the GDP stays the same. scenario 2: If prices stay the same, but people start to save more money, the GDP decreases, although people don't have the impression the personal wealth is decreasing. scenario 3: If prices stay the same, but people take credits to spend more money, the GDP increases, although people while having more stuff are in debt now. scenario 4: If prices increase, people buy less stuff with the same money. As the money that is spended stays the same, the GDP stays the same, but people have less wealth. Also take into account, that if you recalculate GDP by converting into another currency, the picture may change depending on current exchange rates. We need some other index to talk about general wealth in population and the state of economy. GDP is often enough misleading. |
Household Net Worth per capita would probably be a pretty good indicator. Or just total Net Worth if you want a big number.
Then it accounts for savings, debt, government debt, government benefits and new earnings. Increases in technology, loss of value of assets etc.
