In recent years, many people around the world have found it easier to make money from rising asset prices than from working. America's current prosperity depends on unearned wealth, not earned income. For the typical American family, the bulk of that wealth is in housing, which enjoyed big jumps in value. Households have kept the economy going by borrowing freely against the paper gains in the value of their homes.

The surge in share prices in the late 1990s boosted the shareholdings of American households by $7 trillion over four years, equivalent to almost two years' income from employment - without requiring any effort. The value of those shares has since fallen, but the drop has been more than offset by soaring house prices. Since 2000 the value of homes in America has increased by more than $5 trillion, making many Americans feel richer and less inclined to save. But much of this new wealth is just an illusion.

A rise in share prices can, in theory, reflect expected future gains in profits and an increase in economy's productive potential. But rising house prices do not represent an increase in wealth for a country as a whole. They merely redistribute wealth to home-owners from non-home-owners who may hope to buy in the future. Homes are not just assets, they are also a big part of living costs. When the housing prices rise, the capital gain to home-owners is offset by the increased future living costs of non-home-owners. Society as a whole is no better off.

In the long run, the only way to create genuine wealth is to consume less than your income (ie, save) , and invest in real income-creating assets. In a healthy economy, households should spend the income they earn, less whatever they can set aside for the future.....

** from "Economics - making sense of the modern economy"

今天过了一个蛮不错的星期天。打完羽球后，休息一会儿，就和女友跑去 Bugis 拜神，为新的一年祈祷许愿。过后就在附近 shopping，买了一件价廉物美的 Levi's 长袖 T-shirt 和枕头，女友也买了一件米奇 T-shirt，接着到 Starbucks 喝咖啡，吃外面打包的 Tori-Q，看看书，听听音乐，就这样悠哉地过了一个星期天，明天又得上班啦。