Measuring wealth

[Brick Gold]

A lot of these hot billionaires are measured by Forbes according to asset value rather than real income, they use terminology such as liquid and equity. Because this value is determined by how well the company is turning business in real time they can gain and lose "billions" of dollars of value in a single day. This seems ridiculous in many ways and points at being a largely imaginary value. So, say a person with a 100 billion dollar company sold off all physical assets and discontinued the brand name, would they truly have 100 billion dollars at the end of it?

You've also got cold billionaires whose wealth isnt tied up in companies riding on trends and new technology to stay on top, their assets are highly stable and at low risk of fluctuating no matter what they do.

How do you measure the unstable largely imaginary wealth against the hardened unfluctuating stable wealth?

 

[georgephillip]

How do you measure the unstable largely imaginary wealth against the hardened unfluctuating stable wealth?

Is this similar to comparing earnings from industrial capitalism to what are often unearned incomes from the FIRE sector?
America’s FIRE Economy

FIRE Economy Definition

 

[Brick Gold]

Is this similar to comparing earnings from industrial capitalism to what are often unearned incomes from the FIRE sector?
America’s FIRE Economy

FIRE Economy Definition

Im not getting what you mean.

 

[georgephillip]

Im not getting what you mean.

Sorry for the confusion.

When you contrast the asset value vs real income of billionaires it reminds me of what Marx wrote about "fictitious" capital with capital that is actually invested in the physical means of production and workers:

Fictitious capital - Wikipedia

"The market value of fictitious capital assets (such as stocks and securities) varies according to the expected return or yield of those assets in the future, which Marx felt was only indirectly related to the growth of real production.

Perhaps it is also relevant (or not) to note how the number of billionaires has increased over the past forty years in the US?

Number of billionaires in the United States 1987-2012 | Statista

 

[Brick Gold]

I wouldn't call it fictitious as much as I would an imaginary or faith based value. This depends on a continuous profit turn over a long stretch of time in order to secure investors willing to inflate the company dollar value. Theres an inflation there, especially in publicly traded companies where the owners have split their control. The company is being reinforced and sustained with outside resources. Yet, this inflation becomes part of the owners "fortune". When the lifeline is pulled, that value decreases. So, fictitious? Not at all, but maybe misdirected or poorly understood.

 

[georgephillip]

I wouldn't call it fictitious as much as I would an imaginary or faith based value. This depends on a continuous profit turn over a long stretch of time in order to secure investors willing to inflate the company dollar value. Theres an inflation there, especially in publicly traded companies where the owners have split their control. The company is being reinforced and sustained with outside resources. Yet, this inflation becomes part of the owners "fortune". When the lifeline is pulled, that value decreases. So, fictitious? Not at all, but maybe misdirected or poorly understood.

I think it's also important to keep in mind the fact that markets, money, and corporations are all creations of the state, and the number of billionaires in a society is partially governed by the laws and institutions that organize economic activity within that community.

For example, the number of US billionaires increased after 1982 when corporations were allowed to buy-back their own stock.

Should Congress or the SEC ‘Do Something’ About Stock Buybacks?.

 

[Blues Man]

A lot of these hot billionaires are measured by Forbes according to asset value rather than real income, they use terminology such as liquid and equity. Because this value is determined by how well the company is turning business in real time they can gain and lose "billions" of dollars of value in a single day. This seems ridiculous in many ways and points at being a largely imaginary value. So, say a person with a 100 billion dollar company sold off all physical assets and discontinued the brand name, would they truly have 100 billion dollars at the end of it?

You've also got cold billionaires whose wealth isnt tied up in companies riding on trends and new technology to stay on top, their assets are highly stable and at low risk of fluctuating no matter what they do.

How do you measure the unstable largely imaginary wealth against the hardened unfluctuating stable wealth?

Wealth is, always has been and always will be net worth.

 

[Brick Gold]

Wealth is, always has been and always will be net worth.

Don't count your chickens before they hatch as they say

 

[Blues Man]

Don't count your chickens before they hatch as they say

You don't understand net worth if you think that saying applies

 

[Brick Gold]

You don't understand net worth if you think that saying applies

Well, that depends on your social position. For investors and entrepreneuers and businessmen there is a gamble and they might not get a payday. For wage workers and salary workers all their chickens always hatch.