Bubble Wealth

6 Pages Posted: 8 Jul 2021 Last revised: 24 Jan 2022

See all articles by Bradford Cornell

Bradford Cornell

Anderson Graduate School of Management, UCLA

Date Written: January 20, 2022

Abstract

Americans now hold over $1 trillion in cryptocurrencies. Has $1 trillion in wealth been created? From the standpoint of economic theory, the answers is no. The wealth of a society consists of its real assets that produce consumable goods and services. Unless a cryptocurrency provides some type of convenience yield how could it create wealth? On the other hand, everyone who holds the currency thinks of its as wealth because it can be sold and converted into consumption. This short note takes a step in resolving the apparent paradox by presenting a very simple numerical example of the operation of what I call Bubble Wealth.

Keywords: Bitcoin, Bubble Wealth, Valuation

JEL Classification: G00, G10

Suggested Citation

Cornell, Bradford, Bubble Wealth (January 20, 2022). Available at SSRN: https://ssrn.com/abstract=3872160 or http://dx.doi.org/10.2139/ssrn.3872160

Bradford Cornell (Contact Author)

Anderson Graduate School of Management, UCLA ( email )

Pasadena, CA 91125
United States
626 833-9978 (Phone)

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