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Money is created from bank loans. Wealth may be slightly different, but at any given time there is a fixed amount of money in existence and the only way to incr

Money is created from bank loans. Wealth may be slightly different, but at any given time there is a fixed amount of money in existence and the only way to increase it is to originate more bank loans.

Randgalt 10y ago
Money changes hands in exchange for something of value. I give Apple $300 and I get an iPhone. Apple takes that $300 and gives it to someone else in exchange for something they value. Money is merely a medium of exchange. The wealth is the products we produce and trade for.
- jsprogrammer 10y ago
  Yes, but where does $300 come from in the first place?
  - Randgalt 10y ago
    I got it by trading with someone else. You seem fixated on the money supply, which is (mostly) irrelevant in a discussion of wealth and income.
    - jsprogrammer 10y ago
      Wealth and income are denominated in dollars, or other bank currency generally, so they are bound by their availability. For example, you cannot have $2,000,000,000,000,000 in annual income, simply because $2,000,000,000,000,000 do not exist. >I got it by trading with someone else. If you examine the transaction in its historical context, there will be a chain of trades going back to a bank loan (or multiple). You seem fixated on the trade of dollars, while seeming unconcerned about how dollars come to exist.
      - Randgalt 10y ago
        The money could have come from a gold deposit 150 years ago. Who knows. It doesn't have to come from debt. The number of units of currency I have is also irrelevant. The only relevant thing is how valuable those units are to someone else. The value of the units is directly correlated to the amount of work required to get the units.
        jsprogrammer 10y ago
        The amount of non-debt money in circulation is <20% and always shrinking. >The value of the units is directly correlated to the amount of work required to get the units. Do you have a proof of this? I doubt there is much correlation between "amount of work required" and the value of the units. The FRB has instantiated ~$4,000,000,000 with almost no work required and its dependents have gotten those units, also with very little work required.
  - btilly 10y ago
    I strongly suggest that you read http://paulgraham.com/wealth.html http://paulgraham.com/wealth.html. To save time, skip to the section "Money is not Wealth" and then read from there. Note, Paul Graham was the public face of founding ycombinator.
    - jsprogrammer 10y ago
      I am familiar with the argument, but note that Randgalt said: > it's not as if the money is just sitting there and 1% are taking most of it Well, the money is just sitting there. Additionally, of all the money that exists, banks effectively take ~10% off-the-top annually through interest privilege, giving them (and their shareholders) a headstart. Everyone else gets to fight from what's left before it gets destroyed in a principal payment.
      - btilly 10y ago
        You do not appear to be acquainted with how wealth works. Suppose I buy $15 of Xynodyne stock and $1 per share. Suppose later it is trading at $2 per share. I have just made $15 without any money being added to the system. I sell my shares. Do I keep money? No! I buy shares in a money market. Leave it there for 3 months, then sell that for shares in Apple. At each step I am wealthier and wealthier. And it is wealth that wasn't sitting there, it was created out of the fact that people price assets differently. And they price them differently because the company is producing something valued more highly by our whole society. Money doesn't actually enter into the picture. I write a check from my bank account to my broker. My broker settles transactions electronically. I eventually get a transfer from them to my bank, from which I pay my taxes. All of the "money" in this system is a brief record created in one place, destroyed in another. This is all basic economics of fractional reserve banking. The size of our economy is no more limited by the amount of money that exists than it is by how much gold is in the ground. Money is a medium of exchange, not a measure of value. And the rich got that way in one of three ways, owning something that became valuable, creating value where none existed, and theft. In general the ones who got really rich through theft did so through political connections (Carlos Slim comes to mind). Successful entrepreneurs like Paul Graham fall in the second bucket. And the first bucket happened historically, for example the Astor family of New York, but isn't so common now.

Randgalt 10y ago

Money changes hands in exchange for something of value. I give Apple $300 and I get an iPhone. Apple takes that $300 and gives it to someone else in exchange for something they value. Money is merely a medium of exchange. The wealth is the products we produce and trade for.

jsprogrammer 10y ago
Yes, but where does $300 come from in the first place?
- Randgalt 10y ago
  I got it by trading with someone else. You seem fixated on the money supply, which is (mostly) irrelevant in a discussion of wealth and income.
  - jsprogrammer 10y ago
    Wealth and income are denominated in dollars, or other bank currency generally, so they are bound by their availability. For example, you cannot have $2,000,000,000,000,000 in annual income, simply because $2,000,000,000,000,000 do not exist. >I got it by trading with someone else. If you examine the transaction in its historical context, there will be a chain of trades going back to a bank loan (or multiple). You seem fixated on the trade of dollars, while seeming unconcerned about how dollars come to exist.
    - Randgalt 10y ago
      The money could have come from a gold deposit 150 years ago. Who knows. It doesn't have to come from debt. The number of units of currency I have is also irrelevant. The only relevant thing is how valuable those units are to someone else. The value of the units is directly correlated to the amount of work required to get the units.
      - jsprogrammer 10y ago
        The amount of non-debt money in circulation is <20% and always shrinking. >The value of the units is directly correlated to the amount of work required to get the units. Do you have a proof of this? I doubt there is much correlation between "amount of work required" and the value of the units. The FRB has instantiated ~$4,000,000,000 with almost no work required and its dependents have gotten those units, also with very little work required.
- btilly 10y ago
  I strongly suggest that you read http://paulgraham.com/wealth.html http://paulgraham.com/wealth.html. To save time, skip to the section "Money is not Wealth" and then read from there. Note, Paul Graham was the public face of founding ycombinator.
  - jsprogrammer 10y ago
    I am familiar with the argument, but note that Randgalt said: > it's not as if the money is just sitting there and 1% are taking most of it Well, the money is just sitting there. Additionally, of all the money that exists, banks effectively take ~10% off-the-top annually through interest privilege, giving them (and their shareholders) a headstart. Everyone else gets to fight from what's left before it gets destroyed in a principal payment.
    - btilly 10y ago
      You do not appear to be acquainted with how wealth works. Suppose I buy $15 of Xynodyne stock and $1 per share. Suppose later it is trading at $2 per share. I have just made $15 without any money being added to the system. I sell my shares. Do I keep money? No! I buy shares in a money market. Leave it there for 3 months, then sell that for shares in Apple. At each step I am wealthier and wealthier. And it is wealth that wasn't sitting there, it was created out of the fact that people price assets differently. And they price them differently because the company is producing something valued more highly by our whole society. Money doesn't actually enter into the picture. I write a check from my bank account to my broker. My broker settles transactions electronically. I eventually get a transfer from them to my bank, from which I pay my taxes. All of the "money" in this system is a brief record created in one place, destroyed in another. This is all basic economics of fractional reserve banking. The size of our economy is no more limited by the amount of money that exists than it is by how much gold is in the ground. Money is a medium of exchange, not a measure of value. And the rich got that way in one of three ways, owning something that became valuable, creating value where none existed, and theft. In general the ones who got really rich through theft did so through political connections (Carlos Slim comes to mind). Successful entrepreneurs like Paul Graham fall in the second bucket. And the first bucket happened historically, for example the Astor family of New York, but isn't so common now.