The U.S.'s outsized share of global market capitalization is partly driven by its culture of high stock ownership. With more citizens invested in equities compared to other countries where cash is prevalent, the U.S. benefits from a compounding effect that widens the global wealth gap over time like an "alligator jaw," creating a self-reinforcing cycle.
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The wealth divide is exacerbated by two different types of inflation. While wages are benchmarked against CPI (consumer goods), wealth for asset-holders grows with "asset price inflation" (stocks, real estate), which compounds much faster. Young people paid in cash cannot keep up.
The primary driver of wealth inequality isn't income, but asset ownership. Government money printing to cover deficit spending inflates asset prices. This forces those who understand finance to buy assets, which then appreciate, widening the gap between them and those who don't own assets.
Homeownership is the primary vehicle for intergenerational wealth creation in the United States. The average household has four times more wealth tied up in their home than in stock market investments, highlighting the severe economic impact of declining ownership rates.
The AI boom's economic impact extends beyond direct investment. With AI plays driving 80% of stock market gains, a powerful 'wealth effect' is created. This disproportionately benefits the top 10% of earners, who in turn drive the majority of US consumer spending, fueling the broader economy.
Goldman's CEO argues the U.S. growth lead is not temporary. It's fueled by a superior tech innovation ecosystem and more efficient capital formation processes. He contrasts the US's ~$30T economy growing at 2% with Europe's ~$20T economy growing under 1%, predicting the gap will widen.
Nations with high savings rates and small populations, such as Canada and Australia, face a structural challenge: their domestic markets are too small to absorb their own capital. This makes them inherently reliant on the deep, liquid U.S. markets to deploy funds from their pension and superannuation systems.
In 2025, US stocks underperformed global peers despite superior earnings growth. Non-US markets saw significant price increases on flat or negative earnings, a divergence that Goldman Sachs Wealth Management believes is unsustainable, reinforcing their long-term US overweight thesis based on earnings fundamentals.
The U.S. generates 25% of global GDP and holds 45% of science Nobel prizes with under 5% of the world's population. This is not an accident but a direct outcome of a system prioritizing individual liberty. This freedom acts as a gravitational pull for global talent and enables the 'permissionless innovation' that drives economic and scientific breakthroughs.
Recessionary risks are higher in Canada and Europe than in the U.S. This weakness doesn't drag the U.S. down; instead, it triggers capital flight into U.S. assets for safety. This flow strengthens the dollar and reinforces the American economy, creating a cycle where U.S. strength feeds on others' fragility.
The tendency for investors to overweight their domestic stocks is a powerful global bias. The case of Sweden is an extreme example: despite its stock market representing only 1% of world GDP, Swedish citizens invested the majority of their retirement funds domestically, irrationally ignoring 99% of global investment opportunities.
