Maybe a better example would be a country getting leveled in a war. All of the money is still there, but now everyone is poor and has no net worth. How does that work?
It seems kind of like losing that amount of money, even though we didn’t?
In: 3475
One thing I haven’t seen people touch on is wealth. Wealth of sort of like one measure of net worth, so the wealth of a country is the sum of all the assets and peoples net worth. Your wealth is the sun of your assets (basically, eli5 so simplified) your house, car, etc.
Wealth is both created and destroyed all the time. The sandwich maker took bread worth a dollar, meat worth a dollar and put it together with their labor and sold a sandwich for 3 dollars, that extra dollar is newly created wealth, created by transforming goods or resources with their labor.
Later that sandwich was eaten and that wealth was destroyed. You were worth three dollars more when you had the cash, then you traded the cash for a three dollar sandwich and you were worth the same because you traded three dollars for an asset worth three dollars (although you wouldn’t have been able to sell it again since there’s not a market for second hand sandwiches). then you ate the sandwich and your net worth was lowered because you spent your wealth in consumption and destroyed a sandwich worth of goods.
Consumption is the primary driver of Welty destruction, but many things just lose value over time. A car you bought for 30k ten years ago is no longer worth 30. That wealth decreased over time.
Wealth is created and destroyed every day, hopefully more is created than destroyed that’s how an eceonomy and society grow, but in your case of a city being leveled that would represent a huge loss. Money is only one representation of wealth because it lets us buy goods and services, but those foods themselves can be assets which are also wealth.
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