• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 3. Causing the Bubble > The Transfer of Wealth

The Transfer of Wealth

What were the consequences of the bubble? Much wealth was created and then destroyed. Easy come, easy go. On balance, after the great bubble, no wealth was created. This is a difficult judgment because the numbers are not complete; yet it appears to be justified. For example, an analysis by The Wall Street Journal showed that between 1996 and 2001, all the profits reported by some 4000 companies listed on the NASDAQ were offset by losses reported by the same companies—net profits appearing in 1996 through 2000, and net losses in 2001.[13] With no profits on balance for the period, it's reasonable to expect that the valuations of the 4,000 companies should not have increased—although other factors might have caused that to occur.

Does this mean that nothing happened? Not at all. There was a huge gain in wealth by some, and a huge loss of wealth by others—it was as if the government had imposed a large tax for the purpose of redistributing wealth, and in so doing had slowed the long-term growth and development of the economy as a whole.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint