If you asked most people around you about how the last two years have been you would probably get a lot of mixed answers, truth is the Covid19 pandemic has been difficult for most of us and we mean really rough for most people. 2020 and 2021 will be years to be remembered just not always fondly. If we were to describe the last two years we would do so using the immortal words of the anchorman saron burgundy well that escalated quickly but you wouldn't know that by looking at the wealthy did you know the world's billionaires made a combined five trillion dollars during 2021 that's a five and twelve zeroes and sure wealthy people make a lot of money every day but we can't even really begin to describe how much that was and all during a year that most would at least describe as challenging so how did they do it and what does that mean for the rest of us. Today we'll learn just exactly how billionaires made five trillion dollars last year and the lessons we can learn from it.
Wealth growth in the time of covid19. before we really dive into the growth of wealth that occurred during 2021 we feel like we should put that number 5 trillion into perspective how much is 5 trillion it's more than the combined market cap value of apple 2.782 trillion and googles 1.769 trillion it's more than five times the value of tesla which is 849.95 billion same for meta previously facebook at 839 billion or Berkshire Hathaway at 699.15 billion it's more than twice the value of Microsoft at 2.31 trillion.
But maybe just looking at the value of companies doesn't give you a clear picture so let's look at it from the perspective of a country's gross domestic product or GDP Japan is the country with the third-highest overall GDP in the world according to the international monetary fund or IMF they had a GDP of 4.97 trillion dollars in 2021 that means that in 2021 billionaires of the world made more money than the entire country of japan just look at the highest-ranking countries for 2021. the us came in first with 20.49 trillion then china in second 13.4 trillion japan and third like we said at 4.97 trillion fourth was Germany 4.0 trillion fifth united kingdom 2.83 trillion sixth place France 2.78 trillion dollars then in seven India 2.27 trillion Italy and 8 at 2.07 trillion 9 was brazil at 1.87 trillion dollars and Canada in 10th with 1.71 trillion the world has 2 755 people that can be classified as billionaires and in 2021 their combined wealth increased more than the GDP of Germany France or the UK and it was more than the combined GDPs of Priscilla and Canada that's a lot of money we're talking about the equivalent of 28 jeff Bezos is here and if you're thinking that this was normal well think again these were some record-breaking numbers according to a report from Oxfam international using data compiled by Forbes they estimated this increase was larger than the previous 14 years combined suffice it to say they made bank in contrast they estimate that 97 million people around the world were pushed into poverty during 2020 and the number continued to stay the same in 2021.
Let's face it the top one percent is made a lot that's why they're the top one percent in fact since 1995 they've seen 19 times more wealth growth than the bottom 50 of the population but this was something else so how did they do it how did the billionaires of the world achieve these absurd numbers when it looked like everything else was falling apart well it's actually a combination of factors not one single thing to go back a little the 2017 tax cuts and jobs act had already provided significant tax relief to major corporations in the years preceding the pandemic but as 2020 hit the government once again played a significant factor in that wealth increase because of the pandemic the governments of the world provided significant fiscal support to businesses in the form of tax incentives direct aid and lowered interest rates from central banks this in turn caused the price of stocks and shares as well as real estate to rise straight across the board so by already holding these assets investing more an increased demand for their services and products and taking advantage of the stimulus packages provided to businesses in general the wealthiest one percent transformed what was by most accounts a terrible financial year for most into their most profitable year in a while so if you ask how did they make so much money it was kind of a perfect storm of circumstances in some ways the pandemic was a boon to some financial sectors the increased benefits from the government coupled with assets that actually increased in value and a bigger demand for services left the wealthy in an even better position to invest once the market rebounded so if we sum all of this up they were in the perfect position to take advantage of the situation because a dark truth of the crisis and tragedies that happen around the world is this once the government pours out their resources to help the economy recover it's the billionaires who gain the most of it these tax cut backs increased incentives and other benefits meant to boost the economy represented the perfect opportunity for billionaires to invest even more and they did trickle down economy okay so we've established that a combination such as increased government assistance the effects of the pandemic on the demand for some services and the stock market that rebounded cost the wealthiest one percent to become even wealthier.
But where does that leave the rest of us what happens to the 99 percent that's left well there's a lot of debate surrounding the value of empowering the one percent as a way to strengthen the economic growth of a country but first have you ever heard of the term trickle down economy let's take a brief detour from those 5 trillion into the alux classroom today's topic trickle down theory supply side economics and demand side economics alright so you probably have already heard about trickle-down economics the idea that by giving tax breaks and benefits to large corporations and the people that are wealthy this wealth will then trickle down to everyone else have you ever seen a champagne tower something like that you pour at the top and it all trickles down to the other cups but what you might not know is that it actually isn't a theory of economics it's more of a political term people use to vaguely refer to the true economic theory of supply-side economics this economic theory sometimes is referred to as reaganomics due to its popular support by u.s president ronald reagan during the 1981-1989 terms supply-side economics also revolves around the idea of supporting the top.
But it's a little more complex and defined supply side theory has three main pillars tax policy regular policy and monetary policy supply side theory states that production or supply of goods and services is the most important aspect when it comes to economic growth they argue that supply creates its own demand and that by supporting the top they can continue to create more supply and by extension more demand the first pillar tax policy argues that by lowering taxes on companies at the same time supply is being encouraged you increase the interest in opening up new factories which increases job growth the second pillar regulations argues that by lowering the regulations from the government you have a freer market that stimulates competition and innovation with the belief that the free market will always regulate itself in the end and finally the third pillar monetary policy is about controlling the federal reserve's ability to increase or decrease the amount of dollars in circulation supply-side economics proponents argue that this tool is a variable that shouldn't be overused as it could lead to more inflation that's necessary that's why a lot of people backing supply-side economics think we should see a return of the gold standard and in case you don't know the gold standard is a monetary regime where the value of a currency is backed up by gold a physical asset currently most currencies around the world are only backed by the governments that print them these are known as fiat currencies on the other side of the coin we have demand side economics these are also known as keynesian economics due to being developed by john maynard keynes demand side economics argues that what really drives economic growth isn't the supply of goods and services but rather demand if there's less demand in goods say because the economy is hurting demand side theory states the government should support the average consumer through changes to monetary policy interest rates and basically just putting more money in the hands of people they argue that by giving more money to people they'll in turn spend more as demand increases businesses will earn more profit and be incentivized to open more factories so we have two opposing economic theories one that says help the top so they can help the economy and the other that says it's the bottom we should actually invest in so which one is more effective well my dear alexa you're not going to get an answer in this video as the topic has been debated for decades supply-side economics makes a lot of sense in theory but sadly it's hard to predict how businesses and the wealthy will actually use the extra wealth they generate it isn't always reinvested back into the economy and on the other hand people argue if there isn't a direct incentive for businesses to grow economies will stagnate whatever policy you support one thing we can't deny is that when the top one percent get assistance they really make the most of it so what are the lessons to be learned okay so the rich got richer and we can't say for sure if that's to our benefit or not.
But what can we learn from this well a lot more than you think we have a few lessons taken straight from warren buffett's playbook about how to react to these kinds of situations in order to make the most of them number one understand basic economics and policies that apply to your situation to be able to take advantage of the financial tools out there you need to understand and be aware of them first take some time to study some basic economic concepts and tools and see which ones are useful for your particular case if it feels a little overwhelming just start with the basics having at least a rudimentary understanding of how economics works will give you an edge in life number two you can make money in a good market but also in a bad one a common misconception people have is you should only invest and make financial movements when the market is doing well but sometimes the best time to do so is when the market is doing bad you can take advantage of lower stock prices interest rates or other situations that normally happen when the market is bearish what's a financial crisis for some can be the break you need to get ahead and number three be practical just don't go crazy okay during times of economic upheaval it might be tempting to follow a trend and sometimes it can pay off but you want to be thinking long term and what can go up quickly can also plummet just as fast make sure the investment that you're making is based on research and planning not just hype so to wrap all of this up well 2022 is shaping up to be a potentially rocky year for investments what with rising inflation and a volatile start to the stock market it's very likely that the billionaires of the world will do just fine and that's why it's important to pay attention to their movements because even as the world feels like it's burning around us they know where you can find a golden goose in hiding investing your money reading the market and providing a service of value to people especially in times of need can be what makes the difference between talking about the one percent and joining them and as always alexers you stuck with us until the end so you know we've got a bonus for you the first billionaire is considered to be john d rockefeller who achieved that status back in 1916 thanks to his ownership of the standard oil company if we accounted for inflation he would be worth about 25 billion dollars today the next step would be a trillionaire but we're still a few years away from those who do you think will be the first one though bezos musk zuckerberg maybe even someone new well time will tell but we're curious to see what you think you.
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