How the world’s $2.6 quadrillion wealth bomb could explode

July 28, 2026 — 11:57am

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Global wealth is booming, but it is on increasingly shaky foundations.

Last week the McKinsey Global Institute issued its annual global balance sheet. It estimated that global wealth hit almost $US1.8 quadrillion ($2.6 quadrillion, with a quadrillion equalling a thousand trillion) last year. In 2024, it was $US1.7 quadrillion.

While that might be regarded as an indicator of an increasingly prosperous world, McKinsey referred to the “mounting detachment” of the balance sheet from the global economy, with several asset classes growing further out of balance with the underlying growing economy.

Essentially, it is saying that most of the increases in wealth are being driven by paper gains, rather than by real economic growth.

It singled out US equities, where values “soared” to 2.4 times corporate net assets, with profits double their share of GDP relative to their shares in 2000. China’s corporate debt, it said, grew to 80 per cent of real assets against a global average of 50 per cent, while government debt was near all-time highs in the US and was growing most rapidly in China.

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Of the global increase in household wealth to $US570 trillion, only 20 per cent came from real capital formation – new investment in machinery and equipment, buildings, infrastructure and intellectual property – with valuations of existing assets growing 4 percentage points faster than already high consumer price inflation.

It is valuations and inflation driving the balance sheet expansion, not economic growth.

Macquarie Capital’s Viktor Shvets has long spoken and written about “hyper-financialisation” and “a cloud of finance” in which the growth of financial assets far outstrips, and is........

© Brisbane Times