In the parlance of company finances, GDP is like revenue and wealth is the valuation representing the present value of all future profits. So, it seems fine to me that the present value of future profits of the US is 5x the current revenue.
I'm seeking to understand where this analogy may break down. Thanks :)
People are in loads of debt, more regular americans invest in the stock market, driving prices higher, all we need is a spark to get the fire going. Could come in the form of china and Hong Kong, could be the collapse of Deutsche bank, or very high valued startups failing, or something completely unforseen. Theres a lot of uncertainty right now, and any big event could crash it all.
On top of that, the number of companies has been getting smaller and smaller, and the companies left are getting bigger and bigger. If anything, there is more systemic risk than before, and hence even more incentive for bailouts.
As far as I can tell, the day the US stops bailing out equities, I imagine it will be in a weakened state where the USD no longer has reserve currency status, and there might be bigger problems to worry about than a recession. Until then, total stock market ETFs should do at least as well as inflation.
everyone _should_ have stock; what reasonable investment plan doesn't have stock?
you might as well hyperventilate about everyone having drawers full of socks.