Brutal Recession Destroyed Americans' Wealth, Net Worth Down 40% In 3 Years (Forbes)

[cthulu2016]

7. A bank lending against that fake value would have disagreed

I agree with you up to a point, insofar as 2007 valuations were unsustainable. But that doesn't make the effect of the drop much less important.

What if the average hourly wage went from $10.60 in 2001 to $12.60 in 2007, and then dropped to $7.70 in 2010. Would you say that most of that pay-cut was fake and shouldn't be counted? What would the basis be for calling the previous wage gains fake?

Say that congress jumped the minimum wage to $12.60 and then cut it back to $7.70. Would that action be okay because the gain had been arbitrary to begin with?

More to the point, would the economy care? It wouldn't. The economy sees the drop in demand and that drop in demand has roughly the same economic effect whether the previous level of demand was sustainable or not.

The average wage in India or China is probably much, much higher than it was in 1980. If wages there returned to 1980 levels would we shrug and say, "Those wage gains were not sustainable anyway."

The Great Depression followed a major bubble, yet I never hear anyone say, "Meh... A lot of those people who lost their farms had no business owning farms in the first place."

The state/locality taxes you on the assessed value of the house as it sits. That is not done with stocks, which are taxed on profits only, and only when sold. What is the basis for taxing obviously "fake" value? Do the property owners get a rebate on their 2007 taxes because they were based on fake value?


And so on.