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Who said anything about accepting a loss on their goods/services? Capital investments allow them to produce at lower costs, which lets them offer goods/services
by CryptoPunk 7y ago
Who said anything about accepting a loss on their goods/services? Capital investments allow them to produce at lower costs, which lets them offer goods/services at lower prices and still profit.
>>If everyone has half as much money then the supply gets cut in half.
No, money is not wealth. If everyone had half as much money, each unit of that money would double in value.
>>Likewise the supply will only be doubled if everyone has twice as much money.
If we expanded by the money supply 20X, we wouldn't get 20X more production. Money is not valuable in and of itself. It's only a claim on the real goods produced, and each unit will adjust in value based on how many currency units there are relative to real goods produced.
The limiting factor in the value of money is the number of goods/services that the economy is capable of producing. And that capability can only be improved with capital investments.