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 I see now, but I still find the statement in the image misleading.
Also, in the example, would not such events change the value of gold in the society making the gold of other people equal to less wealth than before?

@gioypi The number of dollars you have is not an indication of wealth. think of wealth as "how well can I live" not "how many dollars do I have in my bank".

Lets think of another example to illustrate that. this time I use an axe I own to go chop down trees and mix some concrete and I use my own man power over 20 years to build a luxury house on a mountain top. All of the wealth here is also generated. It has significantly improved my quality of living, beautiful views, luxury home, I am now "wealthy" where before I had nothing. However in doing so I have not made anyone elses home any less appealing or luxurious. Everyone quality of life other than me is exactly the same as it was before I built my home off in the woods.

So again this is an example of me generating significant wealth for myself without needing to take that wealth from anyone else. Even though having one more home in the world may have reduced the money value of everyone elses home by a few pennies they dont actually have any less wealth than they did before, because wealth is not dictated by the money value over time.

@freemo I get it, nice example. Thanks for the clarification.

However, I wish this was how very wealthy people acquired their wealth. The higher I look, the less relevant it appears to me.

@freemo whether it is a pie or not, stolen or not, it is equally disgusting to hoard and sit on a festering pile of it. Even worse if there are people next door living in poverty. It's not about how much you have and how, it is about what you do with what you have.
@gioypi

@namark

Not really, if the wealth you have is generated and you can demonstrate you are exceptionally good at generating wealth, then it is not hoarding a festering pile, your existance is in fact a service to others and the nation by allowing you to have so much wealth since you can continue to generate more wealth for everyone (including yourself) more so than other people (who have not proven their abilities) might be able to do.

@gioypi

@freemo it is a festering pile unless it is necessary for whatever your wealth generation scheme is, which is unlikely as you have generated it without the pile in the first place. If it wasn't necessary before but is somehow necessary now, it's not exactly your skill it is just a gold mine you happened to stumble upon.
@gioypi

@namark

Generally wealth generating schemes generate more wealth the more money they have as an input. So generally every step along the way as they generate wealthy they use that to generate more wealth and a large portion of it is used for wealth generation in increasing amounts, sure.

But also some of it, as you suggest, is just money you have personally for whatever you want to spend it on. But since this is money that would have never existed in the system without you having generated it in the first place, then there is no harm or negativity associated with spending it. Especially when you consider that the spending of that money itself ultimately can go to fund other wealth generating enterprises of other people and helps ensure new people come into the game by winning over some portion of your free funds.

@gioypi

@freemo that input doesn't have to be a part of your personal net worth.

And yes, that's essentially what I'm saying, spending is good, accumulating (in whatever form) is bad (only justifiable if you are planning a bigger spending later down the line).
@gioypi

@namark

Accumulating wealth you generated isnt bad, it just isnt as good as spending it obviously. But if you generate a billion dollars and then dig a hole and burry it, you've done no more harm than if you never generated the billion in the first place. In fact you've probably done some good because you probably generated money for others along side generating that money for yourself.

With that said, all money will eventually get spent, even if that may not happen till after the person dies.

@gioypi

@freemo Even assuming best case scenario that it helped some, It is still bad if there are more people out there that need help. It's like coming across some food and destroying it, when you know your neigbour is starving. Their money being spent after their death doesn't mean they weren't greedy assholes their entire life. Also it might not be spent for a few generations if they teach their heirs(yeah that's still a thing) to be just as greedy and useless as they were.
@gioypi

@namark

That analogy isnt accurate.. It is more accurate to say it is like spending your summer growing tomatoes and instead of giving it to your starving neighbor you can them up and give them to your child, who then uses the canned tomatoes to feed himself or feed a starving naeighboor.

Yea its not "nice" that you had food and let your starving neighboor go hungry and all. But your neighboor is no worse off now than if you never grew that food in the first place.

@gioypi

@freemo I mistakenly assumed that by burry you meant destroy, and not save to dig up later, which makes it worse in my optinion. It's not "not nice" it's bad, really bad.
Also in the analogy you are fed for life (or foreseeable future). Obviously if you have to worry about not having enough food for yourself or your family tomorrow(during a harsh winter) that changes things, but would also be out of context.
@gioypi