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This is an interesting book. It gives a different angle on the ideia in Yanis Varoufakis' book The Global Minotaur which is that money has to circulate in order

by forinti 11y ago

This is an interesting book. It gives a different angle on the ideia in Yanis Varoufakis' book The Global Minotaur which is that money has to circulate in order for the economy to function with stability. You just can't let it pile up too much in one place.

yummyfajitas 11y ago
Most of the wealth held by the rich isn't money failing to circulate. It's productive capacity producing goods for others. Elon Musk's wealth isn't a vault full of gold coins. It's a factory producing cars that other people get to drive. Piketty's book describes this phenomenon as well - his book is fundamentally about the world moving from a situation of having a $1M factory producing $100k in income to a situation of a $2M factory producing $150k in income. (I.e., r=2, g=1.5.)
- Florin_Andrei 11y ago
  > Elon Musk's wealth isn't a vault full of gold coins. Elon is one of the very few people who put their money to excellent use. But for every Elon Musk out there, there are hundreds of Paris Hiltons.
  - yummyfajitas 11y ago
    It's Paris Hilton, the self-made millionaire you are referring to, right? The one disowned by her family, but who leveraged an entertaining personality into her own brand of fashion and and entertainment products? From what I can tell, most of her wealth is in the form of jewelry production and sales. Had she kept her inherited wealth it would be mostly in the form of hotels rather than money.
    - Locke1689 11y ago
      The parent I think is clearly going down the wrong road. Almost by definition, if you've heard of the person to cite then they have an outsized impact on wealth circulation. The people to look at are, say, Peter Oppenheimer, former CFO of Apple (picked at random). I'm sure his net worth is in the hundreds of millions and he has a few very nice houses -- but what's the likelihood that a significant portion of his wealth is reintroduced into the economy? I really know nothing about him, so maybe I'm being unfair and he spends lavishly on yachts and mansions, or is an angel investor in 100s of startups, but I think the prototypical Fortune 500 C-level is probably someone who lives very well, but not lavishly and not up to their very generous means. I should also note I'm excluding passive investment in mutual or hedge funds for the sake of argument, but I'm not sure whether they produce sufficient results to count as "reintroducing" money into the market.
      - yummyfajitas 11y ago
        It's highly unlikely that Oppenheimer is sitting on large piles of cash. Most likely his wealth is again in productive assets - e.g. shares of SPY. As an owner of shares of SPY, he then owns small percentages of factories, airplanes, hotels, logistics and similar things. Virtually no one is actually sitting on money because that's a really dumb thing to do. Investing in productive capacity just provides a lot more money.
        Locke1689 11y ago
        I specifically excluded SPY in the last paragraph as a "productive" investment, but only for the sake of argument -- I admit I'm inclined to agree with you that even passive investment of this type is productive. I think the problem pointed out by the original article is that they don't like this because it tends to produce oligopolies (i.e., "chains"). Unfortunately, I think that's just because non-colluding oligopolies are efficient. So the market is "working," some just don't like the outcome.
        jonknee 11y ago
        Buying someone else's shares of a public company isn't super productive. You're buying a stake in future cash flows at companies, not investing in growth. Especially the way buybacks have been going lately,
        aleh 11y ago
        The cash one exchanges for shares of a public company is usually spent on paying wages, buying equipment, funding R&D etc, thus enabling future growth. If one happens to invest into the inefficient company in a long term it is going to be bust along with investor. How comes this is not productive?
        jonknee 11y ago
        When you buy a share of SPY you're not paying that cash to all the S&P 500 companies, you're paying it to another party that already has a share of SPY. IPOs give money to companies, but trading shares between parties does nothing for the company and contributes $0 to wages, equipment, R&D, etc. I own shares of SPY, if I sell them to you what exactly changes?

by forinti 11y ago

yummyfajitas 11y ago

Most of the wealth held by the rich isn't money failing to circulate. It's productive capacity producing goods for others. Elon Musk's wealth isn't a vault full of gold coins. It's a factory producing cars that other people get to drive. Piketty's book describes this phenomenon as well - his book is fundamentally about the world moving from a situation of having a $1M factory producing $100k in income to a situation of a $2M factory producing $150k in income. (I.e., r=2, g=1.5.)

Florin_Andrei 11y ago
> Elon Musk's wealth isn't a vault full of gold coins. Elon is one of the very few people who put their money to excellent use. But for every Elon Musk out there, there are hundreds of Paris Hiltons.
- yummyfajitas 11y ago
  It's Paris Hilton, the self-made millionaire you are referring to, right? The one disowned by her family, but who leveraged an entertaining personality into her own brand of fashion and and entertainment products? From what I can tell, most of her wealth is in the form of jewelry production and sales. Had she kept her inherited wealth it would be mostly in the form of hotels rather than money.
  - Locke1689 11y ago
    The parent I think is clearly going down the wrong road. Almost by definition, if you've heard of the person to cite then they have an outsized impact on wealth circulation. The people to look at are, say, Peter Oppenheimer, former CFO of Apple (picked at random). I'm sure his net worth is in the hundreds of millions and he has a few very nice houses -- but what's the likelihood that a significant portion of his wealth is reintroduced into the economy? I really know nothing about him, so maybe I'm being unfair and he spends lavishly on yachts and mansions, or is an angel investor in 100s of startups, but I think the prototypical Fortune 500 C-level is probably someone who lives very well, but not lavishly and not up to their very generous means. I should also note I'm excluding passive investment in mutual or hedge funds for the sake of argument, but I'm not sure whether they produce sufficient results to count as "reintroducing" money into the market.
    - yummyfajitas 11y ago
      It's highly unlikely that Oppenheimer is sitting on large piles of cash. Most likely his wealth is again in productive assets - e.g. shares of SPY. As an owner of shares of SPY, he then owns small percentages of factories, airplanes, hotels, logistics and similar things. Virtually no one is actually sitting on money because that's a really dumb thing to do. Investing in productive capacity just provides a lot more money.
      - Locke1689 11y ago
        I specifically excluded SPY in the last paragraph as a "productive" investment, but only for the sake of argument -- I admit I'm inclined to agree with you that even passive investment of this type is productive. I think the problem pointed out by the original article is that they don't like this because it tends to produce oligopolies (i.e., "chains"). Unfortunately, I think that's just because non-colluding oligopolies are efficient. So the market is "working," some just don't like the outcome.
      - jonknee 11y ago
        Buying someone else's shares of a public company isn't super productive. You're buying a stake in future cash flows at companies, not investing in growth. Especially the way buybacks have been going lately,
        aleh 11y ago
        The cash one exchanges for shares of a public company is usually spent on paying wages, buying equipment, funding R&D etc, thus enabling future growth. If one happens to invest into the inefficient company in a long term it is going to be bust along with investor. How comes this is not productive?
        jonknee 11y ago
        When you buy a share of SPY you're not paying that cash to all the S&P 500 companies, you're paying it to another party that already has a share of SPY. IPOs give money to companies, but trading shares between parties does nothing for the company and contributes $0 to wages, equipment, R&D, etc. I own shares of SPY, if I sell them to you what exactly changes?