3 ms·

> But that's not true, the amount of money is constant -- it just changes hands a lot. No it's not: https://en.wikipedia.org/wiki/Money_supply#United_States ht

> But that's not true, the amount of money is constant -- it just changes hands a lot. No it's not: https://en.wikipedia.org/wiki/Money_supply#United_States https://en.wikipedia.org/wiki/Money_supply#United_States > GNP (red line) tripled since 1970 [...] So why on earth do we have to talk about a lack of money when society's wealth has increased so fast? [... Link to income gap ... ] It's less of a problem of income distribution than one of wealth distribution. The key issue is that people with lower incomes accumulate assets that cost them money (house, car, TV...) while those with higher income collect stocks, bonds, rentable real estate property, all of which generate more wealth.

Klinky 14y ago
So wealthy people do not bother with housing, transportation or entertainment, and instead put all their money into investments? I think it's more likely wealthy people had income sources that allowed them to invest, while still enjoying some level of comfort.
- tankenmate 14y ago
  I think it is reasonably clear from the GP that relative levels of investment was the gist; of course rich people live somewhere, moves about and try to keep themselves happy.
  - Klinky 14y ago
    Then I don't see why it's important to state that those with lower incomes paying for housing, transportation or entertainment is the reason for their inability to become wealthy. Merely stating a difference in income causes the disparity is enough. Housing, transportation, communications, food and even entertainment are necessities.
- jonknee 14y ago
  No, it's just that wealthy people do not put the majority of their income into cost centers and instead put them into investments.
  - wildgift 14y ago
    That's because they have more money. You have to pay for the necessities, and then you can save. If you're making near minimum wage, you won't be able to save much. Also, those investments, like stocks and rental properties, transfer wealth from the poor to the rich, generally.
    - jonknee 14y ago
      Sure, no one is disputing the fact that rich people have more money than poor people. For many reasons the rich get richer at the expense of the poor, the OP was noting one of the reasons. Another is that the tax code incentivizes making your income through investments, something unattainable for people who aren't rich.
bjourne 14y ago
>> But that's not true, the amount of money is constant -- it just changes hands a lot. > No it's not: https://en.wikipedia.org/wiki/Money_supply#United_States https://en.wikipedia.org/wiki/Money_supply#United_States Right. Governments print money all the time, but the total value of all the money remains constant, thanks to inflation. It's just a measure of how much power someone has in a society compared to everyone else. > It's less of a problem of income distribution than one of wealth distribution. The key issue is that people with lower incomes accumulate assets that cost them money (house, car, TV...) while those with higher income collect stocks, bonds, rentable real estate property, all of which generate more wealth. That's not given by God. Stocks didn't use to be money making machines and there is nothing that says they have to be. Stocks have been doing amazingly well since about 1980's because during the same time period wages have gotten a smaller and smaller share of the gnp. The ugly truth of the stock market is that for every winner there is also a loser.
- jonknee 14y ago
  > The ugly truth of the stock market is that for every winner there is also a loser. That's hardly the case. The only loser is someone who sell a stock for a loss (and even then considering dividends and the tax advantages it doesn't necessarily mean a net loss).
  - precisioncoder 14y ago
    If our economy has $100 we both receive a paycheck for half the remaining money and you buy a stock that gives you $1/year and I do not, assuming we spend the same you will automatically become richer each year until we are both paid a pittance while you sit on most of the money. I think that was the general idea.
    - stouset 14y ago
      Except, the reason the stock is giving $1/year, is because the economy is actually growing by $1/year.
raintrees 14y ago
I would suggest it is not so much related to level of income, but rather knowledge of money management. The choice of buying more assets than liabilities is a basic, reliable (although frequently dull) way of acquiring wealth. I am reminded of frequent stories of individuals with large incomes still being relatively poor - Doctors, Lawyers, etc. purchasing ever larger houses, ever more luxurious automobiles, etc. (all liabilities). Or, as one individual who like to get peoples' attention puts it: "It's not how much money you make, but how much you keep."

Klinky 14y ago

So wealthy people do not bother with housing, transportation or entertainment, and instead put all their money into investments? I think it's more likely wealthy people had income sources that allowed them to invest, while still enjoying some level of comfort.

tankenmate 14y ago
I think it is reasonably clear from the GP that relative levels of investment was the gist; of course rich people live somewhere, moves about and try to keep themselves happy.
- Klinky 14y ago
  Then I don't see why it's important to state that those with lower incomes paying for housing, transportation or entertainment is the reason for their inability to become wealthy. Merely stating a difference in income causes the disparity is enough. Housing, transportation, communications, food and even entertainment are necessities.
jonknee 14y ago
No, it's just that wealthy people do not put the majority of their income into cost centers and instead put them into investments.
- wildgift 14y ago
  That's because they have more money. You have to pay for the necessities, and then you can save. If you're making near minimum wage, you won't be able to save much. Also, those investments, like stocks and rental properties, transfer wealth from the poor to the rich, generally.
  - jonknee 14y ago
    Sure, no one is disputing the fact that rich people have more money than poor people. For many reasons the rich get richer at the expense of the poor, the OP was noting one of the reasons. Another is that the tax code incentivizes making your income through investments, something unattainable for people who aren't rich.

bjourne 14y ago

>> But that's not true, the amount of money is constant -- it just changes hands a lot. > No it's not: https://en.wikipedia.org/wiki/Money_supply#United_States https://en.wikipedia.org/wiki/Money_supply#United_States Right. Governments print money all the time, but the total value of all the money remains constant, thanks to inflation. It's just a measure of how much power someone has in a society compared to everyone else. > It's less of a problem of income distribution than one of wealth distribution. The key issue is that people with lower incomes accumulate assets that cost them money (house, car, TV...) while those with higher income collect stocks, bonds, rentable real estate property, all of which generate more wealth. That's not given by God. Stocks didn't use to be money making machines and there is nothing that says they have to be. Stocks have been doing amazingly well since about 1980's because during the same time period wages have gotten a smaller and smaller share of the gnp. The ugly truth of the stock market is that for every winner there is also a loser.

jonknee 14y ago
> The ugly truth of the stock market is that for every winner there is also a loser. That's hardly the case. The only loser is someone who sell a stock for a loss (and even then considering dividends and the tax advantages it doesn't necessarily mean a net loss).
- precisioncoder 14y ago
  If our economy has $100 we both receive a paycheck for half the remaining money and you buy a stock that gives you $1/year and I do not, assuming we spend the same you will automatically become richer each year until we are both paid a pittance while you sit on most of the money. I think that was the general idea.
  - stouset 14y ago
    Except, the reason the stock is giving $1/year, is because the economy is actually growing by $1/year.

raintrees 14y ago

I would suggest it is not so much related to level of income, but rather knowledge of money management. The choice of buying more assets than liabilities is a basic, reliable (although frequently dull) way of acquiring wealth. I am reminded of frequent stories of individuals with large incomes still being relatively poor - Doctors, Lawyers, etc. purchasing ever larger houses, ever more luxurious automobiles, etc. (all liabilities). Or, as one individual who like to get peoples' attention puts it: "It's not how much money you make, but how much you keep."