Issue Rising asset values pull capital toward repurchases rather than productive investment

Summary

MGI describes how an outsized balance sheet can expose weaknesses in an economy rather than strengthen it. When property and equity values climb faster than GDP, capital can flow disproportionately into buying assets that already exist instead of building new ones. Such purchases are often financed with substantial borrowing. The result can be higher valuations without the kind of investment that produces growth over the long run. The report sets this mechanism against its finding that wealth in 2025 leaned even more than before on asset prices rising faster than real investment, while the ratio of productive assets to GDP stayed flat.