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Please read more carefully. I'm talking about possession of currency which is zero-sum except when the Fed prints out more bills. You can make a billion pretty

by codexon 17y ago

Please read more carefully. I'm talking about possession of currency which is zero-sum except when the Fed prints out more bills. You can make a billion pretty trinkets with glass and aluminum, and it won't get you any dollars if no one with dollars wants to trade you dollars, and the Fed is not printing extra.

xenophanes 17y ago
but moving currency between people, for "trinkets" is called "trade". trade is not a zero sum process. it creates wealth. so, i buy something from you for $20. then you buy something from me for $20. although the currency comes out equal, we're both ahead. there's no scam here, no incentive or advantage for low scruples, no problem at all.
- codexon 17y ago
  How many times do I have to repeat myself? I never said "wealth" exchange was a zero-sum game. I said currency exchange is a zero-sum game.
  - xenophanes 17y ago
    You mean trading currency for currency doesn't go anywhere? Umm, I guess so. What's your point? The guy wasn't in the currency exchange business.
    - forensic 17y ago
      You'll have to scroll up to see his point. It was related to how the title of article was aiming at the possession of currency rather than the possession of wealth.
      - codexon 17y ago
        Yes it's quite sad how I had to repeat myself 3 times. At least you understand :) What I don't understand is why when anyone here sees the word "zero-sum" they rush in to talk about Paul Graham's explanation of wealth creation regardless of what the subject is. And sadly I've since then lost 5 karma from people who like to jump on this "wealth is not a zero-sum game" bandwagon.
        xenophanes 17y ago
        Is it sad that you assume all capitalist people here are repeating views from PG, rather than explaining their own independent views?
        forensic 17y ago
        But they are repeating PG's views. And they're doing it out of context.
        codexon 17y ago
        What's happening here is that Paul Graham wrote about apples, and I am writing about oranges. You saw the word fruit and now you keep saying apples apples apples.
    - codexon 17y ago
      No, what I am saying is that trading currency for goods, like stocks, is a zero-sum game. The pool of money stays the same (barring the fed printing more). Why is this so hard for you to understand?
julio_the_squid 17y ago
What about interest and electronically created debt? It doesn't depend on the Fed printing anything.
- forensic 17y ago
  That is currency... the far majority of currency in the world is "electronic".
barrkel 17y ago
If you have a billion pretty trinkets, and by pretty I mean that other people desire to have them at some positive price, you only need one single dollar in the system - or other agreed form of money - and you can sell every single one of those trinkets, albeit slowly. And because what you really need is money, rather than currency, you do not require a central bank. All you need is trust in the value of whatever you choose as money - it could be debt backed by a legal system - and that the money has sufficient money-like attributes. If your trinkets are small and durable enough, they might even do as money directly.
- forensic 17y ago
  While what you say is true, it is a non-sequitor. In reality there is not a fixed amount of currency, there is a printing press pumping out more dollars and the dollars are given to someone who then lends them at interest to someone else who then uses them to buy a trinket. As the printing press makes more dollars, the value of each goes down, and so the wealth of everyone in system doesn't actually depend on how much currency they hold but rather the order in which they receive the more recently printed currency. The wealthiest are defined by those who receive it first. It is a pecking order. Whoever receives it last actually doesn't have enough to buy food because by the time he receives the currency, it is already too worthless to be used to compel food from the other members. He either abandons the system and lives off the grid, or starves to death. So while in theory currency does not have to be a zero-sum game, our modern implementation of currency is indeed a zero-sum game. And I say currency specifically because, as everyone loves to point out, basically anything is technically "money" as soon as it is traded. P.S. Note that both pg and this fellow had the same people signing the checks - Yahoo. Yahoo is pretty high on the pecking order because it has always had excellent access to investment bankers who in turn have excellent access to banks who in turn have excellent access to central banks who printed the new batches of money. The closer you are to the central bank, the richer you'll be.
  - v3rt 17y ago
    Since when is HN new-world-order-conspiracy-central? We live in an economy with a certain amount of economic activity and overall wealth, which tend to go up over time (barring recession). To facilitate trade, the central banks of nations issue currency, which acts as a "dual" of the economy (or more precisely, a piece of it - there aren't enough dollars circulating to buy every good and service in the US simultaneously), a pure trade good with fiat value. If the economy kept growing and the supply of currency stayed constant, deflation would result, as previously noted. However, by Keynesian theory (which is not absolutely proven be right, but has worked pretty well over the past 75 years), inflation (at reasonable levels) is more conductive to investment and consumption and overall economic vitality than deflation, due to people being more inclined to spend and invest money that would lose value just sitting there. Thus, the government prints more money every year than would be necessary to match the growth in the economy. This is not some ridiculous plot by the Swiss and the Jews to enslave us all; it's simply a tax on everyone who holds dollars (or, in other countries, other currencies), since the government dilutes the overall pool of currency to grant itself spending money. This "inflation tax" is always a very small percentage of overall government revenues in the US, and even if Keynesian theory were totally wrong, the policy would not be particularly harmful. It would just be another tax, although somewhat regressive, since the poor tend to have more of their net-worth in cash than the rich. And, it makes absolutely no difference who gets the money straight from the printing press, aside from the value of enjoying crisp, shiny new bills. The government spends money it got from printing in exactly the same places as it spends money procured from taxes. I understand what psychological processes drive people to conspiracy theory, but it still frustrates me to no end that so many people believe in the laws of cigar-munching cabals instead of those of economics.

by codexon 17y ago

xenophanes 17y ago

but moving currency between people, for "trinkets" is called "trade". trade is not a zero sum process. it creates wealth. so, i buy something from you for $20. then you buy something from me for $20. although the currency comes out equal, we're both ahead. there's no scam here, no incentive or advantage for low scruples, no problem at all.

codexon 17y ago
How many times do I have to repeat myself? I never said "wealth" exchange was a zero-sum game. I said currency exchange is a zero-sum game.
- xenophanes 17y ago
  You mean trading currency for currency doesn't go anywhere? Umm, I guess so. What's your point? The guy wasn't in the currency exchange business.
  - forensic 17y ago
    You'll have to scroll up to see his point. It was related to how the title of article was aiming at the possession of currency rather than the possession of wealth.
    - codexon 17y ago
      Yes it's quite sad how I had to repeat myself 3 times. At least you understand :) What I don't understand is why when anyone here sees the word "zero-sum" they rush in to talk about Paul Graham's explanation of wealth creation regardless of what the subject is. And sadly I've since then lost 5 karma from people who like to jump on this "wealth is not a zero-sum game" bandwagon.
      - xenophanes 17y ago
        Is it sad that you assume all capitalist people here are repeating views from PG, rather than explaining their own independent views?
        forensic 17y ago
        But they are repeating PG's views. And they're doing it out of context.
        codexon 17y ago
        What's happening here is that Paul Graham wrote about apples, and I am writing about oranges. You saw the word fruit and now you keep saying apples apples apples.
  - codexon 17y ago
    No, what I am saying is that trading currency for goods, like stocks, is a zero-sum game. The pool of money stays the same (barring the fed printing more). Why is this so hard for you to understand?

julio_the_squid 17y ago

What about interest and electronically created debt? It doesn't depend on the Fed printing anything.

forensic 17y ago
That is currency... the far majority of currency in the world is "electronic".

barrkel 17y ago

If you have a billion pretty trinkets, and by pretty I mean that other people desire to have them at some positive price, you only need one single dollar in the system - or other agreed form of money - and you can sell every single one of those trinkets, albeit slowly. And because what you really need is money, rather than currency, you do not require a central bank. All you need is trust in the value of whatever you choose as money - it could be debt backed by a legal system - and that the money has sufficient money-like attributes. If your trinkets are small and durable enough, they might even do as money directly.

forensic 17y ago
While what you say is true, it is a non-sequitor. In reality there is not a fixed amount of currency, there is a printing press pumping out more dollars and the dollars are given to someone who then lends them at interest to someone else who then uses them to buy a trinket. As the printing press makes more dollars, the value of each goes down, and so the wealth of everyone in system doesn't actually depend on how much currency they hold but rather the order in which they receive the more recently printed currency. The wealthiest are defined by those who receive it first. It is a pecking order. Whoever receives it last actually doesn't have enough to buy food because by the time he receives the currency, it is already too worthless to be used to compel food from the other members. He either abandons the system and lives off the grid, or starves to death. So while in theory currency does not have to be a zero-sum game, our modern implementation of currency is indeed a zero-sum game. And I say currency specifically because, as everyone loves to point out, basically anything is technically "money" as soon as it is traded. P.S. Note that both pg and this fellow had the same people signing the checks - Yahoo. Yahoo is pretty high on the pecking order because it has always had excellent access to investment bankers who in turn have excellent access to banks who in turn have excellent access to central banks who printed the new batches of money. The closer you are to the central bank, the richer you'll be.
- v3rt 17y ago
  Since when is HN new-world-order-conspiracy-central? We live in an economy with a certain amount of economic activity and overall wealth, which tend to go up over time (barring recession). To facilitate trade, the central banks of nations issue currency, which acts as a "dual" of the economy (or more precisely, a piece of it - there aren't enough dollars circulating to buy every good and service in the US simultaneously), a pure trade good with fiat value. If the economy kept growing and the supply of currency stayed constant, deflation would result, as previously noted. However, by Keynesian theory (which is not absolutely proven be right, but has worked pretty well over the past 75 years), inflation (at reasonable levels) is more conductive to investment and consumption and overall economic vitality than deflation, due to people being more inclined to spend and invest money that would lose value just sitting there. Thus, the government prints more money every year than would be necessary to match the growth in the economy. This is not some ridiculous plot by the Swiss and the Jews to enslave us all; it's simply a tax on everyone who holds dollars (or, in other countries, other currencies), since the government dilutes the overall pool of currency to grant itself spending money. This "inflation tax" is always a very small percentage of overall government revenues in the US, and even if Keynesian theory were totally wrong, the policy would not be particularly harmful. It would just be another tax, although somewhat regressive, since the poor tend to have more of their net-worth in cash than the rich. And, it makes absolutely no difference who gets the money straight from the printing press, aside from the value of enjoying crisp, shiny new bills. The government spends money it got from printing in exactly the same places as it spends money procured from taxes. I understand what psychological processes drive people to conspiracy theory, but it still frustrates me to no end that so many people believe in the laws of cigar-munching cabals instead of those of economics.