How to lose $20 Trillion

How do you lose $20 Trillion?

The same assets are there. In fact, the demand on those assets is increasing, simply because of the increase in world population.

So what happened over the past two years that the wealth in the US is now about $20 Trillion less?

The simple answer is aggregate pessimism.

When markets decline, the aggregate need is to become more conservative as a method of self-preservation.

This conservatism, pessimism and protectionism contributes to lower overall aggregate demand. This causes job losses and economic contraction.

If President Obama wants to balance the budget in 4 years; in time for the next elections; he simply needs to reverse world psychology, creating progress, optimism and freedom, and the resulting wealth will balance the budget. His goal of shrinking the deficit by half or more should happen.