I was reading this article from the World Economic Forum, when I came across this passage:
When the global equity and real estate markets hit their lowest points in March 2009, \$34.4 trillion of global wealth was destroyed. US households lost almost \$8 trillion in the stock market, on top of the \$6 trillion loss in the market value of their homes.
Is it fair to truth to say that the wealth was "destroyed"? I ask this because that type of phrasing gives the impression that the wealth was really there at one point, and that it wasn't merely an illusion.
I can think of a few reasons why this may be true:
The wealth really did exist elsewhere at first, but when resources were diverted from other assets/resources and invested into real estate – which turned out to be a bubble – those resources had been spent on assets that weren't productive (i.e. didn't give a positive return). The wealth was moved over from valuable assets to less valuable/worthless assets. Capital and labor was spent for nothing.
Wealth is never really expressed in intrinsic "real" terms, but is always a subject of valuation. Wealth is only worth what people value it to be, i.e. what resources they would give up for a transaction of that wealth.
So, is it correct to say that wealth can be destroyed if there was nothing substantial to back it up?