Its kind of sad how many people dont get this. Its like the first thing you learn when you study economics at any level.

@freemo Uh. Correct me if I am wrong, but isn’t the whole point of currency that it is based on something that is scarce, and thus, by extension, valuable? This was essentially how the gold standard functioned in the US previously.

This obviously does not directly apply to fiat currencies commonly seen today, however even in that case there are penalties for producing unending amounts of cash, so in practice there is a finite cap on circulating cash.

As well, then there are the accelerating returns of capital ownership in modern property-oriented society. People with capital will always make better returns on their wealth than those who do not, and more capital generates more returns. This is one of the mechanisms underlying the growing wealth gap in the US and of course in many other places.

So I guess you’ll have to explain what I am missing here. 🤔

@freemo
Are you referring to Pareto improvements? Because, otherwise, how is it not pie?

@gioypi

I am not.

I think it is best understood with an example. You have to understand going in that money is not wealth, and that money is only a small portion of what determines wealth. a person can have no money (a room full of gold bars) and still be extremely wealthy.

With that understanding in mind it is important to realize that wealth is constantly being generated and destroyed. If I buy a shovel for 5$ and go dig up 10,000$ worth of gold in my back yard with it, I have just generated 9,995$ in wealth that didnt exist before. I did not need to take wealth from anyone else to do it.

This is a simple counter example but the idea of wealth generation is in every venture we do, sometimes it is more obvious than others however.

@freemo @gioypi I agree that wealth can be “created” from outside of the existing financial system in that basic sense, but in practice, I think it is fair to say that most of what we see today is the shuttling of wealth from one person (or persons) to another within what is fundamentally a finite pool which slowly expands.

I also agree that wealth is not money, but frankly that is somewhat beside the point when money exists solely to act as a means of making wealth liquid/transforms led into other kinds of wealth. This is why we left the bartering system behind.

As well, wealth creation becomes far easier the more wealth you have to begin with. Anyone, hypothetically, can mine asteroids for untold billions, but it’s a lot more accessible when you have the resources to build an asteroid mining company with rockets and mining equipment and staff rather than starting with a few sticks and a rock, metaphorically speaking.

So I find your statements somewhat practically misleading. 😗

@freemo @gioypi As well, of course you took your wealth from someone else when you dug it up. You took it from the environment, from other organisms, etc. It simply wasn’t known or tallied wealth before that, and arguably is only “free” to take because humans really only recognize property ownership as something attributable to other humans, at best.

The Earth is essentially a closed system, more-or-less, so there is no new wealth being created, only unfinished accounting being updated.

In the purest sense, one could perhaps argue that knowledge creation is perhaps the purest form of “wealth creation”, as the efficiency gains and reworking of existing wealth in ever-more-valuable forms is perhaps one of the most powerful ways to take low-value resources and convert them into higher-value resources.