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Prices Aren’t Everything, Especially When Markets Fail

June 30, 2012
| Blogs & Op-eds

The current book-values of the Gen-Xers have been hit hard. The first asset most families purchase is a home, and then they slowly build up their portfolio over their careers. Therefore, their current book measure of “wealth” has been disproportionately hit. However, it is still the same house; and, future buyers of it are better off. So the lesson for policy makers is to not confuse prices with value. Sometimes they are the same, sometimes they are not. Economic policy would be on a stronger footing if it kept its eye on the real economy (e.g., the number of houses being produced) and not just the price-based economy.