5 ms·

Whilst it sounded cute, an actual explanation would have been great. Mind expanding?

by lox 11y ago

Retric 11y ago
Total wealth is not fixed over time. If you spend X resources making a solar panel and it produces X + Y resources over it's lifetime there is a net gain of resources even ignoring money. At scale investment returns are bound by GDP growth and how much of those returns are spent.
CPLX 11y ago
It's not a zero-sum game, there are more assets now than when we all lived in mud huts or roamed the plains in search of food. Were there to be no real returns to investment we would all have just been trading around the same fixed amount of assets for the last 10,000 years, which is of course nonsensical. His argument is that nominal returns adjusted for inflation in the long run average to zero. Which is saying that there is no such thing as a real return to investment. However that is incorrect, as investing in productive assets can increase the world's net wealth and productive capacity. As one can observe by the vast increase in our collective productive capacity from the stone age through the present day.
- lsd5you 11y ago
  Substitute inflation for wage inflation. It's not that there are no returns, but that the rate of return is completely decoupled from reality. Productivity growth is what (1-2%)? Real terms wage inflation is what (~0% since the 70s).
  - base 11y ago
    Productivity growth is just a part of the equation. You have population growth and several other factors.
- neffy 11y ago
  He's actually correct if you're talking strictly about the monetary framework. That we are as a society collectively richer (i.e. we have more stuff) is indisputable - but if you get into how the stuff is priced, and what happens to those prices over time, as more stuff is produced, and the money supply grows at the same time, it gets decidedly murky as to what prices and value even mean. His point however was not about stuff, it was about return on savings i.e. payments in money of money. That is indeed bounded.

Whilst it sounded cute, an actual explanation would have been great. Mind expanding?

by lox 11y ago

Whilst it sounded cute, an actual explanation would have been great. Mind expanding?

Total wealth is not fixed over time. If you spend X resources making a solar panel and it produces X + Y resources over it's lifetime there is a net gain of resources even ignoring money. At scale investment returns are bound by GDP growth and how much of those returns are spent.

CPLX 11y ago

It's not a zero-sum game, there are more assets now than when we all lived in mud huts or roamed the plains in search of food. Were there to be no real returns to investment we would all have just been trading around the same fixed amount of assets for the last 10,000 years, which is of course nonsensical. His argument is that nominal returns adjusted for inflation in the long run average to zero. Which is saying that there is no such thing as a real return to investment. However that is incorrect, as investing in productive assets can increase the world's net wealth and productive capacity. As one can observe by the vast increase in our collective productive capacity from the stone age through the present day.

lsd5you 11y ago
Substitute inflation for wage inflation. It's not that there are no returns, but that the rate of return is completely decoupled from reality. Productivity growth is what (1-2%)? Real terms wage inflation is what (~0% since the 70s).
- base 11y ago
  Productivity growth is just a part of the equation. You have population growth and several other factors.
neffy 11y ago
He's actually correct if you're talking strictly about the monetary framework. That we are as a society collectively richer (i.e. we have more stuff) is indisputable - but if you get into how the stuff is priced, and what happens to those prices over time, as more stuff is produced, and the money supply grows at the same time, it gets decidedly murky as to what prices and value even mean. His point however was not about stuff, it was about return on savings i.e. payments in money of money. That is indeed bounded.