Originally posted by sonhouse
So if you have a house worth $100,000 is that counted as your wealth? It would seem that would be a variable depending on how much is mortgaged Vs the assessed value.
For instance, if a young couple buys a house that costs $100,000 that wouldn't seem to me to count towards their 'wealth' since their equity in the house is essentially zero, maybe 10% if ...[text shortened]... ing.
But what about income? Doesn't that factor in? How is 'wealth' tied to income if at all?
Generally a home is partly balanced by a mortgage, so the $100K home with a $90k mortgage leaves about $10k wealth. For average Americans and Europeans wealth amounts to that plus any savings or retirement plan, minus credit card and other debts.
Most people, Americans included are economically ignorant, paying lots of interest, instead of earning it.
Each of us has only 24 hours a day, and even if very industrious, can use only about a third of that time earning wages. To rise above wage earning, we have to employ capital to earn for us, and capital accumulation is done by savings.