8 ms·

There is no such thing as wealth-building financial instruments. You may be better off by cashing in some interests or dividends but someone else will lose the

by danbruc 11y ago

There is no such thing as wealth-building financial instruments. You may be better off by cashing in some interests or dividends but someone else will lose the same amount of money. And it probably won't be someone rich who doesn't have to care much.

Nimitz14 11y ago
That's not true... lol.
- danbruc 11y ago
  Counterexample?
  - asmithmd1 11y ago
    lets say I have $50k saved. I can buy a bar of gold and bury it in my backyard - producing exactly nothing for anybody. Or I can buy solar panels for the elementary school down the street and have them pay me 90% of their prior electric bill. The elementary school has a lower electric bill every month and I have a steady income stream and no one does any work.
    - danbruc 11y ago
      Someone - probably the taxpayer - is working and giving a share of what he earns to the school's budget which in turn forwards a share to you. And by the way, when you buy your bar of gold you pay some guys to dig some gold out of the earth and melt it into a nice bar. However I am not sure how the value and the price of a bar of gold compare.
    - jbooth 11y ago
      The definition of watt, if I recall correctly, is "work".
  - seanflyon 11y ago
    Bank lends farmer money to buy a tractor, farmer doubles productivity.
ken47 11y ago
I think the first thing is to ensure that you understand how trade can produce net value increases for all involved parties: http://en.wikipedia.org/wiki/Comparative_advantage http://en.wikipedia.org/wiki/Comparative_advantage. It's not a big jump to see how at least some financial instruments can be wealth-building.
- danbruc 11y ago
  I have to disagree. Money does not create value, work does, and therefore investing money can not create any value on its own. You can of course invest money that is in turn used to enable the creation of value by work, for example by buying machines that are required for the work, but once the investment has been payed back any additional returns on this investment are just taking away a share of the value created by the work which rightfully belongs to the workers doing the work. Money can catalyze the creation of value but it does not create value on its own.
  - oldmanjay 11y ago
    This reminds me of arguments that money must be on the gold standard to have value. Any theory that doesn't explain observed reality is not a theory, and it is definitely observed reality that the concept of value has no strict ties to work.
    - danbruc 11y ago
      So if it is not (only) the amount of work that makes up the value of goods or services, what (else) is it? And I am neither interested in the supply and demand situation which may cause the price to deviate from the value, nor in the use value.
      - mkempe 11y ago
        The labor theory of value is a mistake with roots in both Adam Smith and Karl Marx. The Austrian school of economics explained and demonstrated how it is utterly wrong, and they have presented a much better theory. Look up (and read) Carl Menger. George Reisman has developed a brilliant, modern presentation that dismantles the problems with the labor theory of value, and the related exploitation theories. [1] [1] https://mises.org/library/classical-economics-vs-exploitation-theory https://mises.org/library/classical-economics-vs-exploitatio...
duckingtest 11y ago
Financial markets are a way to sell and buy information, the arrangement of a productive forces in the economy. Profit is the result of selling information - arranging productive forces - that increased output. Loss results from decrease. The difference between a human and a ~80kg pile of basic elements is their arrangement. So unless the two are equivalent to you, you can't claim the arrangement has no value. So no, nobody is losing. On the contrary, individual profit is only a fraction of the added value to the economy, because the counterparty is doing the exact same thing. Every voluntary trade is done in expectation of profit by both sides. When on average that expectation is more right than wrong, economy grows.

by danbruc 11y ago

Nimitz14 11y ago

That's not true... lol.

danbruc 11y ago
Counterexample?
- asmithmd1 11y ago
  lets say I have $50k saved. I can buy a bar of gold and bury it in my backyard - producing exactly nothing for anybody. Or I can buy solar panels for the elementary school down the street and have them pay me 90% of their prior electric bill. The elementary school has a lower electric bill every month and I have a steady income stream and no one does any work.
  - danbruc 11y ago
    Someone - probably the taxpayer - is working and giving a share of what he earns to the school's budget which in turn forwards a share to you. And by the way, when you buy your bar of gold you pay some guys to dig some gold out of the earth and melt it into a nice bar. However I am not sure how the value and the price of a bar of gold compare.
  - jbooth 11y ago
    The definition of watt, if I recall correctly, is "work".
- seanflyon 11y ago
  Bank lends farmer money to buy a tractor, farmer doubles productivity.

ken47 11y ago

I think the first thing is to ensure that you understand how trade can produce net value increases for all involved parties: http://en.wikipedia.org/wiki/Comparative_advantage http://en.wikipedia.org/wiki/Comparative_advantage. It's not a big jump to see how at least some financial instruments can be wealth-building.

danbruc 11y ago
I have to disagree. Money does not create value, work does, and therefore investing money can not create any value on its own. You can of course invest money that is in turn used to enable the creation of value by work, for example by buying machines that are required for the work, but once the investment has been payed back any additional returns on this investment are just taking away a share of the value created by the work which rightfully belongs to the workers doing the work. Money can catalyze the creation of value but it does not create value on its own.
- oldmanjay 11y ago
  This reminds me of arguments that money must be on the gold standard to have value. Any theory that doesn't explain observed reality is not a theory, and it is definitely observed reality that the concept of value has no strict ties to work.
  - danbruc 11y ago
    So if it is not (only) the amount of work that makes up the value of goods or services, what (else) is it? And I am neither interested in the supply and demand situation which may cause the price to deviate from the value, nor in the use value.
    - mkempe 11y ago
      The labor theory of value is a mistake with roots in both Adam Smith and Karl Marx. The Austrian school of economics explained and demonstrated how it is utterly wrong, and they have presented a much better theory. Look up (and read) Carl Menger. George Reisman has developed a brilliant, modern presentation that dismantles the problems with the labor theory of value, and the related exploitation theories. [1] [1] https://mises.org/library/classical-economics-vs-exploitation-theory https://mises.org/library/classical-economics-vs-exploitatio...

duckingtest 11y ago

Financial markets are a way to sell and buy information, the arrangement of a productive forces in the economy. Profit is the result of selling information - arranging productive forces - that increased output. Loss results from decrease. The difference between a human and a ~80kg pile of basic elements is their arrangement. So unless the two are equivalent to you, you can't claim the arrangement has no value. So no, nobody is losing. On the contrary, individual profit is only a fraction of the added value to the economy, because the counterparty is doing the exact same thing. Every voluntary trade is done in expectation of profit by both sides. When on average that expectation is more right than wrong, economy grows.