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Surely if everyone increases their wealth then the value of the trading currency must be proportionally lower? Wealth is a marker of ones assets relative to ot
by headmelted 9y ago
Surely if everyone increases their wealth then the value of the trading currency must be proportionally lower?
Wealth is a marker of ones assets relative to others -- if everyone has the same wealth then no-one is wealthy.
What have I missed here?
- syncsynchalt 9y agoThe two of you have defined wealth differently. You have defined wealth as "having more than someone else". They have defined wealth as "easily able to meet needs and wants". In that light, both of you are making correct arguments to your own definitions.
- finnh 9y agoNot quite - liquidity helps prevents recessions. When recessions happen, people (in the aggregate) work less than they otherwise would. Our true source of wealth is our output, which is the product of (work * productivity). See Krugman’s story about the capitol hill baby-sitting coop: http://www.slate.com/articles/business/the_dismal_science/1998/08/babysitting_the_economy.html http://www.slate.com/articles/business/the_dismal_science/19...
- dnautics 9y agoKrugman misidentifies the problem with the co-op. Basically the whole thing is a failure in the exercise of price controls. An arbitrary authority decides on a unit of a resource that shouldn't have fixed value should have fixed value, and his solution is to introduce inflation... I suppose when you have a hammer everything looks like a nail.
- eximius 9y agoEveryone in the stock market winning does not mean everyone is winning. That is, not everyone is in the stock market. MOST are not in the stock market. Even more are not in the stock market in any appreciable, day-to-day way. If my 401k went up 100x, I'd still have to go to work and budget because my 401k is not liquid.
- icedchai 9y agoIf your 401k went up 100x, you could quit, roll it over to an IRA, and pay early withdrawal penalties. Done.
- brianwawok 9y agoIf all 401ks went up 100x, then inflation would cause the price of all goods to go up 100x, and you would need to go back to work
- icedchai 9y agoHe didn't say all. He said his.
- eximius 9y agoNo, let's say all. Depending on the report you read, between one third and one half of americans couldn't come up with $2,000 in an emergency if they needed it. The cost of most goods could not rise or people would starve. The stock market going up makes no difference to a majority of america.
- icedchai 9y agoMore people own stocks than you seem to believe: http://factmyth.com/factoids/about-half-of-americans-own-stocks/ http://factmyth.com/factoids/about-half-of-americans-own-sto...
- eximius 9y agoAnd what is their average exposure? If you have 10k in a 401k and it goes up by 100x, that's great, but not enough to immediately retire. If you have 50k in a 401k and your funds double (a more reasonable increase, but still absurdly well)... so what? The point is, the stock market is a terrible metric of how their wealth is doing for a great many people. Enough people that drastic upward movements will only affect the prices of higher-end items because it will not immediately inject cash into people's lives who are living paycheck to paycheck (or nearly are) and need to buy food.
- inputcoffee 9y agoWealth could be defined as consumption. (Not necessarily in the sense of using up resources. You could include externalities). Winning is defined as increasing consumption. Everyone can have access to more of something. For instance, there are more books available to everyone. (Trying to think of a neutral, apolitical item).