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I should possibly have qualified your original 'lost' phrasing, but my point stands. Yes, value is created, but money isn't, by the actions you describe. If I
by Jedd 8y ago
I should possibly have qualified your original 'lost' phrasing, but my point stands.
Yes, value is created, but money isn't, by the actions you describe.
If I 'value add' the ingredients of a sandwich, and then sell it to you, you still have to surrender (or lose) money.
Any sale of goods or services ideally involves both parties determining that the transaction is favourable to their interests -- but it's impossible to avoid the fact that the buyer will have less money as a result.
This isn't a bad thing. Arguably a strong indicator of the health of an economy is the agility of money / wealth within it. But your original observation was:
> But what I didn't understand was that mostly we made money when other people lost it.
... and that's an ineluctable outcome of any financial transaction.
- wpietri 8y agoIf I give somebody $10 for a sandwich, I didn't lose the money. I traded it for something more valuable. If I spend 8 hours at work and get paid a day's wage, I didn't lose the time; I traded it for something more valuable. Value was created. When two parties make a bet, though, one of them loses and one of them wins. The losing side doesn't say, "That's great because I now have this cup of coffee I value more." They just write it off as a loss. When I worked for prop trading firms, in every trade we did one side of a trade won and the other lost. In working for real businesses, both sides of a trade mostly walk away winners. Hopefully this difference is clear to you; it's that distinction I was pointing at. If you're trying to make some sort of narrow point about my use of the colloquial phrases "made money" and "lost money", I grant that I was indeed being colloquial. Strictly speaking, we also didn't actually make money; I am told only the Federal Reserve gets to make new dollars.
- Jedd 8y agoI'm not trying to make 'some sort of narrow point' around any colloquial vernacular. Merely pointing out that any transaction involves a transfer, and your claim that some transactions are worse because someone has less money at the end of it, is perhaps missing the point. Unless the people you were dealing with both went into the deal knowing which one would lose money - then it's comparable to your 'placing a bet' analogy. Sure, I'm not doubting that it was (probably) ethically dubious - and kudos for not participating in that industry any longer. As to: > If I give somebody $10 for a sandwich, I didn't lose the money. I traded it for something more valuable. - that's clearly not true. You have ten fewer dollars than you did before the transaction. Whether it's more valuable to you is very much subjective, though if you asked someone if they'd prefer $10 or a sandwich, most people would say the $10. Between $100 and ten sandwiches, I'd suggest all would choose the money. Conflating 'winners' with who came out ahead in terms of self-assessed value proposition of a particular transaction is to also miss the point. > We turned a profit by being smarter or faster or luckier than the people we traded with. This is the essence of trade.
- wpietri 8y agoAs far as I can tell, this is at best semantic nonsense, and at worst wilful misunderstanding. I never claimed that "some transactions are worse because someone has less money at the end of it". If you read it that way, that's your error. You seem to be hung up on a very particular reading of "lose". It is not the reading I intend, and it's clearly not the reading most people take from it.
- perl4ever 8y ago"Whether it's more valuable to you is very much subjective, though if you asked someone if they'd prefer $10 or a sandwich, most people would say the $10." I would say it depends on whether I'm hungry or not.