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Financial Capital

Essay by   •  July 21, 2011  •  Essay  •  489 Words (2 Pages)  •  1,616 Views

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Definiton

Most of us associate wealth with money, our savings, our investments, our homes or other forms of "financial capital." wealth is the abundance of valuable resources or material possessions. An individual, community, region or country that possesses an abundance of such possessions or resources is known as wealthy. According to The American Heritage Dictionary of the English Language the word wealth comes from the Old English words "well" (well-being) and "th" (condition) which taken together means "the condition of well-being".

However, its meaning varies depending on the context being used and there is no universally agreed upon explanation. In general, economists define wealth as "anything of value" which includes both the subjective nature of the idea and the idea that it is not a fixed or static concept. Various definitions and concepts of wealth have been stated by various individuals and in different contexts. Defining wealth can be a normative process with a variety of ethical implications.

A more simplified way to define wealth is to look at it in economic perspective which is the net worth of a person, household, or nation, that is, the value of all assets owned net of all liabilities owed at a point in time. The word "wealth" is often confused with "income". These two terms describe different but related things. Wealth consists of those items of economic value that an individual owns, while income is an inflow of items of economic value. The relation between wealth, income, and expenses is:

change of wealth = income − expense

Therefore it is possible for an individual with a large income to have small or even negative wealth.

Wealth may be measured in nominal or real values, that is in money value as of a given date or adjusted to net out price changes. The assets include those that are tangible (land and capital) and financial (money, bonds, etc.). Measurable wealth typically excludes intangible or nonmarketable assets such as human capital and social capital. Environmental assets are not usually counted in measuring wealth, in part due to the difficulty of valuation for a non-market good.

The global wealth is not distributed equally among all the countries in the world. At the end of the 20th century, wealth was concentrated among the G8 which consists of Canada, France, Germany, Italy, Japan, Russia, United Kingdom and United States of America and Western industrialized nations, along with several Asian and OPEC nations. An Energy Information Administration report stated that OPEC member nations were projected to earn $1.251 trillion in 2008 from their oil exports, due to the record crude prices. Moreover, according to The Globe and Mail in "The rich really do own the world" stated that the richest

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