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> .... In other words, "desirable places to live" is not a finite, limited resource; we can create more. > Most human wealth is like the latter, not the former

> .... In other words, "desirable places to live" is not a finite, limited resource; we can create more. > Most human wealth is like the latter, not the former; we can create more of it. But you have to have a mindset that you can create wealth. That is a fundamentally different viewpoint than the viewpoint many people seem to have. Agreed. Another thing many people miss is that money isn't wealth: its simply the measuring stick or common language/protocol we collectively use to measure the wealth or value people create through their work. Simply creating money out of thin air, or out of non-collateralized debts results in systemic distortions in money's ability to accurately measure wealth and value. This leads to price signals that no longer communicate real needs, which in turn leads well-intentioned people to make malinvestments.

pdonis 6y ago
> Simply creating money out of thin air, or out of non-collateralized debts results in systemic distortions in money's ability to accurately measure wealth and value. This leads to price signals that no longer communicate real needs, which in turn leads well-intentioned people to make malinvestments. Can't upvote this enough. If only most people grasped this and saw through the smoke screens that politicians and financial institutions put up to disguise what is really going on. The only thing I would add to this is that, in addition to the distortion effect you describe, creating money is a method of redistributing wealth from the poor to the rich, since the newly created money ends up going mostly to the rich.
- jurassic 6y ago
  > creating money is a method of redistributing wealth from the poor to the rich, since the newly created money ends up going mostly to the rich. I'm not sure it's as simple as that. Creating more money reduces the value of money that already exists. It helps those who are heavily indebted (including the government) by reducing the real cost of those debts and hurts anybody with a large amount of net worth saved in cash. Both rich and poor people gain a lift from this debt-reduction effect; rich because they use leverage to purchase income-producing assets, and the poor because it erodes the cost of any consumer debt they have. The savers are losers, regardless of net worth.
  - pdonis 6y ago
    > Creating more money reduces the value of money that already exists. Yes, which is why all the people who don't get any of the newly created money lose wealth. They have the same amount of money as before, but it's worth less. Where does the wealth they lose go? To the people who did get the newly created money. In other words, it's a wealth transfer from whoever doesn't get the newly created money, to whoever does. Usually the latter are banks and financial institutions, i.e., the rich. > It helps those who are heavily indebted As long as debts are denominated in dollars, yes, the real cost of the debt is reduced. But the people who don't get any newly created money also lose buying power, and the latter loss is not fully compensated for by the reduction in the real cost of their debt. To see why, consider a simple example: I have $1000 in monthly income, $200 of which goes to pay off debt. The government creates some more money but I don't get any of it. The dollars I have to spend on debt each month stays the same, $200, but it now represents less real cost than before, so yes, the real cost of my debt has gone down. But the dollars I have left over for everything else also stays the same: it was $800 before and it's $800 after. But the $800 now buys me less than it did before, so in real terms I am still worse off. > The savers are losers, regardless of net worth Assuming they don't get any of the newly created money, yes.

pdonis 6y ago

> Simply creating money out of thin air, or out of non-collateralized debts results in systemic distortions in money's ability to accurately measure wealth and value. This leads to price signals that no longer communicate real needs, which in turn leads well-intentioned people to make malinvestments. Can't upvote this enough. If only most people grasped this and saw through the smoke screens that politicians and financial institutions put up to disguise what is really going on. The only thing I would add to this is that, in addition to the distortion effect you describe, creating money is a method of redistributing wealth from the poor to the rich, since the newly created money ends up going mostly to the rich.

jurassic 6y ago
> creating money is a method of redistributing wealth from the poor to the rich, since the newly created money ends up going mostly to the rich. I'm not sure it's as simple as that. Creating more money reduces the value of money that already exists. It helps those who are heavily indebted (including the government) by reducing the real cost of those debts and hurts anybody with a large amount of net worth saved in cash. Both rich and poor people gain a lift from this debt-reduction effect; rich because they use leverage to purchase income-producing assets, and the poor because it erodes the cost of any consumer debt they have. The savers are losers, regardless of net worth.
- pdonis 6y ago
  > Creating more money reduces the value of money that already exists. Yes, which is why all the people who don't get any of the newly created money lose wealth. They have the same amount of money as before, but it's worth less. Where does the wealth they lose go? To the people who did get the newly created money. In other words, it's a wealth transfer from whoever doesn't get the newly created money, to whoever does. Usually the latter are banks and financial institutions, i.e., the rich. > It helps those who are heavily indebted As long as debts are denominated in dollars, yes, the real cost of the debt is reduced. But the people who don't get any newly created money also lose buying power, and the latter loss is not fully compensated for by the reduction in the real cost of their debt. To see why, consider a simple example: I have $1000 in monthly income, $200 of which goes to pay off debt. The government creates some more money but I don't get any of it. The dollars I have to spend on debt each month stays the same, $200, but it now represents less real cost than before, so yes, the real cost of my debt has gone down. But the dollars I have left over for everything else also stays the same: it was $800 before and it's $800 after. But the $800 now buys me less than it did before, so in real terms I am still worse off. > The savers are losers, regardless of net worth Assuming they don't get any of the newly created money, yes.