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> Wealth tied up in art is not doing anything Wealth* that is not doing anything has no effect on the economy. Suppose I had $100 trillion in cash (or art, or

> Wealth tied up in art is not doing anything Wealth* that is not doing anything has no effect on the economy. Suppose I had $100 trillion in cash (or art, or other useless commodity) in a vault somewhere, and never spend a dime of it. How is it impeding the economy? If I didn't tell you about it, you wouldn't even know it existed. It's only when I start spending it, to redirect labor per my wishes, that I start affecting the economy. If I spend it all on yachts, that will cause a lot of labor and materials to go to yachts that won't contribute anything to the economy once built, instead of going to something more productive. *Using "wealth" to mean fiat money, or art, or anything that has no productive use. E.g. if the wealth was instead in the form of idle farmland, that would be used to grow food if owned by someone else, then yes, that would be impeding the economy. So one must distinguish between wealth with inherent value, and wealth that only has value because people are willing to pay for it.

hansel_der 4y ago
> If I didn't tell you about it, you wouldn't even know it existed but it does exist and is "missing" from the economy (i.e. other peoples pockets)
- car_analogy 4y ago
  If you add a zero to the end of every bill in circulation, there will be 10x more money, but people won't be any better off.
- makomk 4y ago
  Not really. There is not some fixed amount of money in existence and certainly not some fixed amount of wealth. Governments and banks create money as necessary to facilitate the actual economy in producing actual stuff, and as for wealth, well... When the price that some artist's works trade at goes up, such that the value of the ones sitting in some billionaire's vault is now higher, that extra wealth clearly doesn't come from anywhere at all. It simply springs into existence from nowhere, and will spring out of existence just as easily if private ownership of art becomes effectively impossible. What is a limiting factor in the real economy's ability to make people better off is its capacity to produce actual goods and services for them to buy, and that capacity is not used in any way by wealth sitting around doing nothing.
  - imtringued 4y ago
    >There is not some fixed amount of money in existence No, but people constantly shout "money printing" when the money supply goes up even though it could be as a result of people producing more physical capital. Imagine producing more physical capital and being told you don't deserve liquidity in proportion to the capital/value you produced. That is the problem with a fixed supply currency system like the gold standard. Why is it a problem to keep the money supply fixed? Imagine a theoretical economy where 100% of the money is in the hand of a single person. Even though the rest of the economy is able to produce and barter, it would be far more efficient to use liquidity i.e money to facilitate the division of labor. That one guy with all the money is effectively blocking the public infrastructure we call money. Transactions that ought to happen don't happen. Money doesn't fulfill its function as a medium of exchange. Therefore it is only appropriate to tax people in proportion to the damage they cause to the economy by excessive patience and holding excessive amounts of liquidity. It like an illegal parking fee intended to keep the streets free.
    - makomk 4y ago
      The thing is that during the last two years, governments have systematically shut down the actual productive parts of the economy that make stuff to fight Covid and tried to fill in the gap produced by printing and handing out money instead. This does not work.
imtringued 4y ago
>If I spend it all on yachts, that will cause a lot of labor and materials to go to yachts that won't contribute anything to the economy once built, instead of going to something more productivity Actually that would result in a manufacturing industry. The problem is that if you wanted to buy a Yacht in say south Africa you wouldn't manufacture it in South Africa despite the mass unemployment problem.

hansel_der 4y ago

> If I didn't tell you about it, you wouldn't even know it existed but it does exist and is "missing" from the economy (i.e. other peoples pockets)

car_analogy 4y ago
If you add a zero to the end of every bill in circulation, there will be 10x more money, but people won't be any better off.
makomk 4y ago
Not really. There is not some fixed amount of money in existence and certainly not some fixed amount of wealth. Governments and banks create money as necessary to facilitate the actual economy in producing actual stuff, and as for wealth, well... When the price that some artist's works trade at goes up, such that the value of the ones sitting in some billionaire's vault is now higher, that extra wealth clearly doesn't come from anywhere at all. It simply springs into existence from nowhere, and will spring out of existence just as easily if private ownership of art becomes effectively impossible. What is a limiting factor in the real economy's ability to make people better off is its capacity to produce actual goods and services for them to buy, and that capacity is not used in any way by wealth sitting around doing nothing.
- imtringued 4y ago
  >There is not some fixed amount of money in existence No, but people constantly shout "money printing" when the money supply goes up even though it could be as a result of people producing more physical capital. Imagine producing more physical capital and being told you don't deserve liquidity in proportion to the capital/value you produced. That is the problem with a fixed supply currency system like the gold standard. Why is it a problem to keep the money supply fixed? Imagine a theoretical economy where 100% of the money is in the hand of a single person. Even though the rest of the economy is able to produce and barter, it would be far more efficient to use liquidity i.e money to facilitate the division of labor. That one guy with all the money is effectively blocking the public infrastructure we call money. Transactions that ought to happen don't happen. Money doesn't fulfill its function as a medium of exchange. Therefore it is only appropriate to tax people in proportion to the damage they cause to the economy by excessive patience and holding excessive amounts of liquidity. It like an illegal parking fee intended to keep the streets free.
  - makomk 4y ago
    The thing is that during the last two years, governments have systematically shut down the actual productive parts of the economy that make stuff to fight Covid and tried to fill in the gap produced by printing and handing out money instead. This does not work.

imtringued 4y ago

>If I spend it all on yachts, that will cause a lot of labor and materials to go to yachts that won't contribute anything to the economy once built, instead of going to something more productivity Actually that would result in a manufacturing industry. The problem is that if you wanted to buy a Yacht in say south Africa you wouldn't manufacture it in South Africa despite the mass unemployment problem.