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Let me reframe the economy for you with an analogy. Imagine wealth as a fluid. When it's in your account, it resides in a bulb. Connected to these bulbs are pi
by salawat 5y ago
Let me reframe the economy for you with an analogy.
Imagine wealth as a fluid. When it's in your account, it resides in a bulb. Connected to these bulbs are pipes connecting you to each person or business's bulb you transact with. Each transaction is facilitated by applying vacuum to transfer a small amount of fluid from bulb to bulb.
In this thing, you have entities that have many more or much larger bulbs than others, with more powerful vacuums that increase in size with the amount of capital they have at their disposal.
Every time you add a bunch of fluid to the system for everyone, you still have all the same networks for extraction in place, and no ability to prevent those connections from just extracting more.
Rent, in particular, is special. Realistically speaking, the pipe that extracts rent to your landlord is not just a transaction facilitator, but is an important mechanism for ensuring that your landlord's wealth relative to the rest of the system is maintained. So in a way, the amount getting extracted will always scale once your landlord is made aware of a global infusion of working fluid to everyone, otherwise, the "value" of their real estate is "diminished" in light of the global infusion.
Real estate as financial instrument is weird like that. Unfortunately, attempts to control that reactive rent adjustment are fraught with side-effects, because when your entire basis for free market economics is that greed and wealth accumulation (considered axiomatic human vices) can be put to productive use by leaving things alone, as evidenced by any attempt to do otherwise having undesirable outcomes, see the history of centrally managed economies.
At least that's as far as I've cared to read up on the matter. After a while trying to get to the bottom of it though, you realize once economics abstracts away any complexities around money moving => physical things happening, it might as well be pontificating on the weather for the questionability of measures involved.
This is a sign of me hitting the absolute depth of my understanding and needing to do more digging to potentially get further but not being capable of devoting the time at the moment.