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If all billionaires actually did place all their money in a Scrooge McDuck cash vault and locked it there for good like Scrooge did, it would actually be good f

If all billionaires actually did place all their money in a Scrooge McDuck cash vault and locked it there for good like Scrooge did, it would actually be good for the rest of us in one way: the value of our money would go up. To illustrate this, imagine an expensive sports car. It's only expensive because there are people that can pay for it. If everyone who could afford it locked their money up and stopped spending, the person who wanted to sell that car would have to sell it at a much lower price if they wanted to sell it at all.

cowpig 4y ago
No it wouldn't, the movement of money is what drives an economy. Think of it this way: Alice has a dollar, gives it to person Bob for the food they grow, who gives it to person Clarice for the clothes they make, who gives it to person A again for their art. Each of Alice, Bob, and Clarice made a dollar and got something they wanted for that dollar. If Alice instead decides to hoard the dollar, nobody makes any income and there is no economy.
- WalterBright 4y ago
  What happens under those circumstances is they barter. Barter is inefficient, but it's better than nothing.
- vouaobrasil 4y ago
  I didn't say if everyone locked their money away it would be good, just if billionaires did it. Alice and Bob would still buy clothes and food. 99% (or some high percentage) of the world would still be buying and selling stuff, just not billionaires under my thought experiment. There would still be a large movement of money.
  - tmikaeld 4y ago
    Then you'd take away the demand for such luxury items, they wouldn't be made, so who benefits?
    - yunwal 4y ago
      You do because instead of resources being diverted to building mega-yachts and private jets, they will be used on resources for the non-ultra-rich
- simne 4y ago
  > If Alice instead decides to hoard the dollar, nobody makes any income and there is no economy. It is not truth. Money is not just papers, or numbers, they are equivalents of products and services. And for real economy is totally normal, to hoard resources. Sure, ideal abstract hoarding is harmful, but in real life, exists hoarding with purpose, or some strategy involving hoarding. For example, one could hoard money in cash, enough to pay all his credits bodies. Other examples, in retail, typical shop have warehouse, with products for few days of trade - this is hoarding 100%; near all enterprises have warehouses, for at least few weeks of work; when products shipped via sea on cargo ship, these ships become moving warehouses. Now, imagine, hoarding disappear. From first look it have some pros - warehouses costs money and they added to costs of products and services. But if You'll look deep, You'll see, that products and services are not done instantly, exists some lag, from decision to make, to delivery. - Hoarding working as buffer, so we don't have to wait, we could buy products and services immediately, from warehouse. For enterprises things are even more significant, because they have huge costs cut, because buying large amount of some resources, for few months in advance (or even for few years), could be magnitudes cheaper, than jit buy small daily batches. Other important consideration, transportation is not 100% reliable. Exists possibility, that truck with resources (parts) will delay somewhere or just broken, and if You have not hoarded equivalent resources, Your enterprise will stop working, until these unlucky truck finish it's trip.
- simne 4y ago
  BTW, modern high-tech production is not instant. I've hear, TSMC spend up to few weeks to make modern chip. But they don't make one chip, they make wafer(S), with 100-1000 chips on each (depend on scale). So, TSMC make BATCHES of chips, and hoarding ready chips in warehouse, periodically shipping batches.
WalterBright 4y ago
What you're describing is "deflation". Deflation isn't good for the economy any more than inflation is.
- vouaobrasil 4y ago
  "good for the economy" is rather meaningless. High inflation is good for borrowers, and deflation is good for lenders. In order to say whether it is good or bad, you have to have a metric to define good, and calculate it somehow. Some people have dismissed my comment but I think it's a lot more subtle than can be dismissed by "the flow of money drives the economy".
  - WalterBright 4y ago
    Good for the economy means maximizes prosperity. A lot of things are definitely good for that, and many things are bad for it. Money should be neutral.
rsj_hn 4y ago
Billionaires purchase very little consumption, as a fraction of their wealth. Most of their wealth is invested. So if they locked up their money in a vault Scrooge McDuck style, what would happen is that interest rates would rise, and asset prices would fall. Whether that's good or bad depends on whether you are a borrower (bad) or lender (good). Everyone is a little bit of both (e.g. they have some retirement investments but also take out mortgages and auto loans), so there isn't a simple answer to the thought experiment. And this also changes based on the government policy, as this thought experiment assumes no government. Government could react in a number of ways, from buying bonds directly to offset the wealthy selling their investments, or raising interest rates, or increasing public investment, depending on whether the government is more interested in price stability or maintaining total investment, or some other objective. The main problem is that you are assuming that a group of people, en masse, will begin to act irrationally, and that's generally not how we think of economic interventions, but it's a good exercise to do.

cowpig 4y ago

No it wouldn't, the movement of money is what drives an economy. Think of it this way: Alice has a dollar, gives it to person Bob for the food they grow, who gives it to person Clarice for the clothes they make, who gives it to person A again for their art. Each of Alice, Bob, and Clarice made a dollar and got something they wanted for that dollar. If Alice instead decides to hoard the dollar, nobody makes any income and there is no economy.

WalterBright 4y ago
What happens under those circumstances is they barter. Barter is inefficient, but it's better than nothing.
vouaobrasil 4y ago
I didn't say if everyone locked their money away it would be good, just if billionaires did it. Alice and Bob would still buy clothes and food. 99% (or some high percentage) of the world would still be buying and selling stuff, just not billionaires under my thought experiment. There would still be a large movement of money.
- tmikaeld 4y ago
  Then you'd take away the demand for such luxury items, they wouldn't be made, so who benefits?
  - yunwal 4y ago
    You do because instead of resources being diverted to building mega-yachts and private jets, they will be used on resources for the non-ultra-rich
simne 4y ago
> If Alice instead decides to hoard the dollar, nobody makes any income and there is no economy. It is not truth. Money is not just papers, or numbers, they are equivalents of products and services. And for real economy is totally normal, to hoard resources. Sure, ideal abstract hoarding is harmful, but in real life, exists hoarding with purpose, or some strategy involving hoarding. For example, one could hoard money in cash, enough to pay all his credits bodies. Other examples, in retail, typical shop have warehouse, with products for few days of trade - this is hoarding 100%; near all enterprises have warehouses, for at least few weeks of work; when products shipped via sea on cargo ship, these ships become moving warehouses. Now, imagine, hoarding disappear. From first look it have some pros - warehouses costs money and they added to costs of products and services. But if You'll look deep, You'll see, that products and services are not done instantly, exists some lag, from decision to make, to delivery. - Hoarding working as buffer, so we don't have to wait, we could buy products and services immediately, from warehouse. For enterprises things are even more significant, because they have huge costs cut, because buying large amount of some resources, for few months in advance (or even for few years), could be magnitudes cheaper, than jit buy small daily batches. Other important consideration, transportation is not 100% reliable. Exists possibility, that truck with resources (parts) will delay somewhere or just broken, and if You have not hoarded equivalent resources, Your enterprise will stop working, until these unlucky truck finish it's trip.
simne 4y ago
BTW, modern high-tech production is not instant. I've hear, TSMC spend up to few weeks to make modern chip. But they don't make one chip, they make wafer(S), with 100-1000 chips on each (depend on scale). So, TSMC make BATCHES of chips, and hoarding ready chips in warehouse, periodically shipping batches.

WalterBright 4y ago

What you're describing is "deflation". Deflation isn't good for the economy any more than inflation is.

vouaobrasil 4y ago
"good for the economy" is rather meaningless. High inflation is good for borrowers, and deflation is good for lenders. In order to say whether it is good or bad, you have to have a metric to define good, and calculate it somehow. Some people have dismissed my comment but I think it's a lot more subtle than can be dismissed by "the flow of money drives the economy".
- WalterBright 4y ago
  Good for the economy means maximizes prosperity. A lot of things are definitely good for that, and many things are bad for it. Money should be neutral.

rsj_hn 4y ago

Billionaires purchase very little consumption, as a fraction of their wealth. Most of their wealth is invested. So if they locked up their money in a vault Scrooge McDuck style, what would happen is that interest rates would rise, and asset prices would fall. Whether that's good or bad depends on whether you are a borrower (bad) or lender (good). Everyone is a little bit of both (e.g. they have some retirement investments but also take out mortgages and auto loans), so there isn't a simple answer to the thought experiment. And this also changes based on the government policy, as this thought experiment assumes no government. Government could react in a number of ways, from buying bonds directly to offset the wealthy selling their investments, or raising interest rates, or increasing public investment, depending on whether the government is more interested in price stability or maintaining total investment, or some other objective. The main problem is that you are assuming that a group of people, en masse, will begin to act irrationally, and that's generally not how we think of economic interventions, but it's a good exercise to do.