IV.

Personal Wealth

A person's holdings of currency, bank balances, and other financial instruments constitute personal wealth as distinct from national wealth. These holdings, moreover, are not items of social wealth, but only claims on that wealth against the actual material objects that compose social wealth, such as a house or a car. Economists estimate wealth by measuring the actual physical stock of assets.

In a period of inflation, private wealth may rise while its social value falls; the monetary value of a house, for instance, may rise in relation to other prices, although the house is actually deteriorating physically. To reach a valid measurement of wealth, monetary valuations must be deflated to real values, discounting the effects of changes in the purchasing power of money.