In today’s society, the idea that “you must own assets” has become almost a cliché. Phrases like “make your money work for you” and “capital income should outpace labor income” are now common knowledge. Many people are putting these principles into practice, and in fact, the proportion of financial assets in household wealth in developed countries is at an all-time high. It’s not uncommon to see young people on the streets discussing their investments in U.S. stocks or building monthly dividend portfolios.
Interest in real estate is equally strong. In South Korea, for instance, many in their 30s are aggressively buying property, pulling together all available resources to purchase new apartments in Seoul and its surrounding areas. But why is there such a rush to own assets? The underlying reason is the belief that “the value of assets will increase.” This belief is closely tied to the desire to become wealthier, and many have come to realize the validity of this principle.
However, the fact that so many people have recognized the importance of asset ownership could be one of the biggest risks we face today. The capital system requires a clear distinction between the rich and the poor to function properly. When this boundary becomes blurred, the system can start to crack.
Finance is the management of funds, but without a strong underlying economic structure, it means nothing. For a nation’s economy to thrive, someone has to engage in productive activities, creating a foundation on which the financial sector can operate. But what happens when a large portion of the population chooses to live off investments rather than engaging in productive work?
In reality, South Korea is seeing a growing number of young people who have no intention of working. At the same time, the real estate market is facing challenges as buyers struggle to pay off their final payments. In such a situation, some level of failure is necessary to reset the system, but with so many people owning assets, failure becomes increasingly difficult to achieve.
Governments and financial institutions are trying to manage this by ensuring that risk does not materialize, maintaining a structure where returns are realized instead. This is evident in the stock market as well. In the U.S., whenever the stock market falters, the Federal Reserve steps in to stabilize it.
The future of the asset market seems clear. Scarce assets will become even scarcer, and those who hold them will accumulate more wealth. Whether it’s prime real estate in Seoul, dominant big tech companies, or Bitcoin, these assets will maintain their scarcity and continue to increase in value. However, focusing solely on the asset market can hinder the development of the underlying economic structure.
What truly matters is the fundamental growth of the economy through production, consumption, innovation, and progress. If these foundations are neglected, the apparent prosperity of the asset market may simply be masking an underlying deflationary reality.
If you want to survive in this system, it’s crucial to focus on owning scarce assets and keeping that information to yourself. But beyond personal survival, for the long-term sustainability of humanity, we must aim to transform the economic structure and create greater value together.
This is the core challenge we face in 2024: balancing the widespread desire for asset ownership with the need to foster genuine economic and societal progress.