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| Ckwop |
 Posted: Wed Dec 14, 2005 8:06 am |
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Guest
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Hello there,
I hear on the news at least once a year that the world economy is
growing by x%, which in my layperson understanding, means the the world
got wealthier this year. How is this possible?
To facilitate discussion, let me create a simple example. Suppose we
have 6,000 person nation detached from society and we give each of them
100 credits to use as a universal currency. This money can't be created
or destroyed, it can only collect in one person's pockets at the
expense of another person. To me this seems like a zero sum game! How
can the whole society get richer with a fixed amount of money?
If the value of the money simply changed under this system, then I'm
left with a bigger sense of befuddlement because how do we measure the
intrinsic wealth of our fictious nation? I have no idea how this is
possible and would love to know how real world economists work this
stuff out.
Simon. |
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| Just Cocky |
| Posted: Wed Dec 14, 2005 10:48 am |
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On 14 Dec 2005 05:06:34 -0800, "Ckwop" <simon.johnson@gmail.com>
wrote:
[quote:3de93dff1b]
To facilitate discussion, let me create a simple example. Suppose we
have 6,000 person nation detached from society and we give each of them
100 credits to use as a universal currency. This money can't be created
or destroyed, it can only collect in one person's pockets at the
expense of another person. To me this seems like a zero sum game! How
can the whole society get richer with a fixed amount of money?
[/quote:3de93dff1b]
Let me ask you a question. Of the two guys below, who do you think is
the wealthiest?
1) A guy with several houses, several cars, lots of TV's, plenty of
food, private jets, and any other conceivable thing.
2) A guy with all the gold available in the Universe but absolutely
nothing else? |
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| Guest |
| Posted: Wed Dec 14, 2005 12:13 pm |
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"The economy is growing" usually means that the _production_ of the
country (or world) is growing.
This brings problems, even so. If the economy produces only apples and
peaches, and it produces 95% as many apples as last year and 110% as
many peaches as last year, what is the change in production. The USA
doesn't produce anywhere near the number of buggywhips that we produced
in 1910. To solve that peroblem, US economists deal with an elborate
"market basket" of goods and price that -- the change in that price
level is the change in the value of money. Then the REAL gross
domestic product is how much money would buy everything which the
country produced last year (at the prices that prevailed) divided by
the price level. The growth in that is teh growth in the economy.
In terms of wealth, there are two kinds of assets -- real goods and
paper assets. Paper assets are things like stocks and bonds. If I owe
you $1,000, then you are $1,000 richer and I am $1,000 poorer; but the
_country_ isn't any richer or poorer. The entire wealth of the country
is the sum of (the dollar value) of all the real assets that are held
in the country. (If we simplify by having no foriegn accounts.) The
value of the shoes you own and the drill presses that GM owns. Stocks
don't count, because stock in GM is just a share of the drill presses
and other tools that GM owns.
Sorry that this is so complicated, but I simplified as much s I could. |
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| Guest |
| Posted: Wed Dec 14, 2005 3:10 pm |
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On 14 Dec 2005 05:06:34 -0800, "Ckwop" <simon.johnson@gmail.com>
wrote:
[quote:d333ee0d51]I hear on the news at least once a year that the world economy is
growing by x%, which in my layperson understanding, means the the world
got wealthier this year. How is this possible?
[/quote:d333ee0d51]
People produced more wealth.
[quote:d333ee0d51]To facilitate discussion, let me create a simple example. Suppose we
have 6,000 person nation detached from society and we give each of them
100 credits to use as a universal currency. This money can't be created
or destroyed, it can only collect in one person's pockets at the
expense of another person. To me this seems like a zero sum game! How
can the whole society get richer with a fixed amount of money?
[/quote:d333ee0d51]
Money is not wealth.
[quote:d333ee0d51]If the value of the money simply changed under this system, then I'm
left with a bigger sense of befuddlement because how do we measure the
intrinsic wealth of our fictious nation? I have no idea how this is
possible and would love to know how real world economists work this
stuff out.
[/quote:d333ee0d51]
They use money to measure wealth, but it is an inexact metric.
-- Roy L |
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| Jim Blair |
| Posted: Thu Dec 15, 2005 3:20 pm |
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"Ckwop" <simon.johnson@gmail.com> wrote in message
news:1134565594.748965.110070@f14g2000cwb.googlegroups.com...
[quote:9b0e02cf8b]Hello there,
I hear on the news at least once a year that the world economy is
growing by x%, which in my layperson understanding, means the the world
got wealthier this year. How is this possible?
To facilitate discussion, let me create a simple example. Suppose we
have 6,000 person nation detached from society and we give each of them
100 credits to use as a universal currency. This money can't be created
or destroyed, it can only collect in one person's pockets at the
expense of another person. To me this seems like a zero sum game! How
can the whole society get richer with a fixed amount of money?
If the value of the money simply changed under this system, then I'm
left with a bigger sense of befuddlement because how do we measure the
intrinsic wealth of our fictious nation? I have no idea how this is
possible and would love to know how real world economists work this
stuff out.
Simon.
[/quote:9b0e02cf8b]
Hi,
Money is not wealth, it is a measure of wealth. I think the best way to
view "wealth" is that resides in the organization of matter.
While matter cannot be created (in any way practical enough to effect this
discussion), matter can be reorganized into forms that are of greater use
to humans.
We call that "creating wealth".
http://www.geocities.com/capitolhill/4834/value.txt
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good
time call: http://www.geocities.com/capitolhill/4834
No animals were harmed in making this post |
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| Andy F. |
| Posted: Thu Dec 15, 2005 7:44 pm |
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Guest
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"Ckwop" <simon.johnson@gmail.com> wrote in message
news:1134565594.748965.110070@f14g2000cwb.googlegroups.com...
[quote:a72209dbb5]Hello there,
I hear on the news at least once a year that the world economy is
growing by x%, which in my layperson understanding, means the the world
got wealthier this year. How is this possible?
To facilitate discussion, let me create a simple example. Suppose we
have 6,000 person nation detached from society and we give each of them
100 credits to use as a universal currency. This money can't be created
or destroyed, it can only collect in one person's pockets at the
expense of another person. To me this seems like a zero sum game! How
can the whole society get richer with a fixed amount of money?
[/quote:a72209dbb5]
The amount of money isn't fixed. Money is created and destroyed all the
time.
[quote:a72209dbb5]If the value of the money simply changed under this system, then I'm
left with a bigger sense of befuddlement because how do we measure the
intrinsic wealth of our fictious nation? I have no idea how this is
possible and would love to know how real world economists work this
stuff out.
Simon.
[/quote:a72209dbb5] |
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| Zerge |
| Posted: Fri Dec 16, 2005 2:35 pm |
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Guest
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Ckwop wrote:
[quote:ea358e484b]Hello there,
I hear on the news at least once a year that the world economy is
growing by x%, which in my layperson understanding, means the the world
got wealthier this year. How is this possible?
To facilitate discussion, let me create a simple example. Suppose we
have 6,000 person nation detached from society and we give each of them
100 credits to use as a universal currency. This money can't be created
or destroyed, it can only collect in one person's pockets at the
expense of another person. To me this seems like a zero sum game! How
can the whole society get richer with a fixed amount of money?
If the value of the money simply changed under this system, then I'm
left with a bigger sense of befuddlement because how do we measure the
intrinsic wealth of our fictious nation? I have no idea how this is
possible and would love to know how real world economists work this
stuff out.
Simon.
[/quote:ea358e484b]
Wealth comes from having things. If I have stuff, I'm wealthy. The only
way to get stuff I want, is to first make stuff that others want, then
trade with them. Money is simply an easy way of doing this trade;
barter is too complicated. Money is only a symbolic representation of
the value of the stuff. Money is NOT fixed. As more stuff is
manufactured and traded, the central bank will mint more money, so
people can trade. As technology progresses, productivity increases, so
we make more stuff faster. That's how economies grow. Can't put it in
simpler terms. |
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| Phil Scott |
| Posted: Sat Dec 17, 2005 1:57 am |
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"Ckwop" <simon.johnson@gmail.com> wrote in message
news:1134565594.748965.110070@f14g2000cwb.googlegroups.com...
[quote:8c99d8bc56]Hello there,
I hear on the news at least once a year that the world
economy is
growing by x%, which in my layperson understanding, means
the the world
got wealthier this year. How is this possible?
To facilitate discussion, let me create a simple example.
Suppose we
have 6,000 person nation detached from society and we give
each of them
100 credits to use as a universal currency. This money can't
be created
or destroyed, it can only collect in one person's pockets at
the
expense of another person. To me this seems like a zero sum
game! How
can the whole society get richer with a fixed amount of
money?
If the value of the money simply changed under this system,
then I'm
left with a bigger sense of befuddlement because how do we
measure the
intrinsic wealth of our fictious nation? I have no idea how
this is
possible and would love to know how real world economists
work this
stuff out.
Simon.
[/quote:8c99d8bc56]
Goods production from raw materials create jobs and profits
and wealth... the US and all other nations then issue more
currency to allow for the trading of that wealth and economy.
that answers your question.
However nations tend to cheat...they print more money than is
warranted by actual production. why? To fund themselves
(the burocrats) and other special interests (govt contracts
with elected officials getting some of the action by ownership
or via the back door.)
its a simple as that.
This approach of course devastates the nation as it rewards
the corrupt, and takes earnings from the hands of those who
produced the goods.
Phil Scott
> |
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| Guest |
| Posted: Sat Dec 17, 2005 4:11 pm |
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On 16 Dec 2005 11:35:10 -0800, "Zerge" <zerge@hotmail.com> wrote:
[quote:1c3f5468b2]The only
way to get stuff I want, is to first make stuff that others want, then
trade with them.
[/quote:1c3f5468b2]
No, you can also steal it, or even better, appropriate natural
resources and then make others pay you for access to them.
-- Roy L |
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| Dan in Philly |
| Posted: Sat Dec 17, 2005 8:30 pm |
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Guest
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"Ckwop" wrote in message ...
[quote:a37237ab77]To facilitate discussion, let me create a simple example. Suppose we
have 6,000 person nation detached from society and we give each of them
100 credits to use as a universal currency. This money can't be created
or destroyed, it can only collect in one person's pockets at the
expense of another person. To me this seems like a zero sum game! How
can the whole society get richer with a fixed amount of money?
If the value of the money simply changed under this system, then I'm
left with a bigger sense of befuddlement because how do we measure the
intrinsic wealth of our fictious nation? I have no idea how this is
possible and would love to know how real world economists work this
stuff out.
[/quote:a37237ab77]
Assuming:
there is real growth in the economy, and
the amount of money is fixed,
then each 'credit' buys more stuff. So 100 'credits' buys more and more
goods every year.
Note: this is deflation, where the price of real goods decreases over time.
Better to have the amount of money increasing a little faster than real
output, so you have low, positive inflation.
Note 2: 'wealth' is the value of real assets (capital, land). If real
production increases, then wealth generally increases. The only exception is
if the discount rate (interest rate) changes, because future production will
have a different present value.
Dan in Philly |
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| The Trucker |
| Posted: Sun Dec 18, 2005 9:27 pm |
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<royls@telus.net> wrote in message
news:43a47e94.33168933@news1.qc.sympatico.ca...
[quote:0825b857db]On 16 Dec 2005 11:35:10 -0800, "Zerge" <zerge@hotmail.com> wrote:
The only
way to get stuff I want, is to first make stuff that others want, then
trade with them.
No, you can also steal it, or even better, appropriate natural
resources and then make others pay you for access to them.
[/quote:0825b857db]
And that, of course, does not actually "create" wealth. Those
kind of deals just move wealth from one person (or nation,
or corporation) to another.
Wealth (defined as total utility) is created in two ways:
1. Technological innovation realized in _real_ capital.
2. The division and specialization of land and labor (assumes a market).
There are no (or at least I don't know of any) other ways
to actually create wealth (we speak of goods and liesure).
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org |
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| Jim Blair |
| Posted: Mon Dec 19, 2005 2:29 pm |
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Guest
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"Zerge" <zerge@hotmail.com> wrote in message
news:1134761710.751256.15600@g47g2000cwa.googlegroups.com...
[quote:8895ce8c93].....
Wealth comes from having things. If I have stuff, I'm wealthy.
[/quote:8895ce8c93]
Hi,
Close, but having more wealth is not having MORE stuff. Not more by weight,
say. It is having better stuff: stuff (matter) that better serves my needs
or my interests.
Several years ago it was pointed out in a thread here that the amount of
"stuff" that Americans have (on average, by weight) has not changed in the
last hundred years or so. What has changed is the ability of their "stuff"
to satisfy their wants and needs. A car rather than a horse drawn wagon or
carriage. A heavy cast iron wood burning stove replaced with an electric or
gas range, etc. We are "richer" now because we have "better stuff" rather
than "more stuff". Wealth is in the way matter is organized. Wealth is
created when trees => lumber, ore => metals => manufactured goods, sand =>
microchps in computers, etc.
Wealth is decreased when houses => ashes and CO2.
[quote:8895ce8c93].....The only
way to get stuff I want, is to first make stuff that others want, then
trade with them.
[/quote:8895ce8c93]
Unfortunately not the ONLY way. You can steal from others.
[quote:8895ce8c93]....Money is simply an easy way of doing this trade;
barter is too complicated. Money is only a symbolic representation of
the value of the stuff.
[/quote:8895ce8c93]
Yes.
[quote:8895ce8c93].....Money is NOT fixed. As more stuff is
manufactured and traded, the central bank will mint more money, so
people can trade.
[/quote:8895ce8c93]
The central bank does not HAVE to, but they should, so as to try to keep
overall prices approximately constant. That is, they should try to keep the
volume of money growing at about the same rate as the growth in wealth. At
least that is what "monetary theory" claims ;-)
[quote:8895ce8c93]....As technology progresses, productivity increases, so
we make more stuff faster.
[/quote:8895ce8c93]
Not just "more" but BETTER stuff. And not so much FASTER as with less
human labor.
[quote:8895ce8c93]...That's how economies grow. Can't put it in
simpler terms.
[/quote:8895ce8c93]
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good
time call: http://www.geocities.com/capitolhill/4834 |
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| Zerge |
| Posted: Tue Dec 20, 2005 4:07 pm |
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Guest
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Jim Blair wrote:
[quote:1ddc7ca491]"Zerge" <zerge@hotmail.com> wrote in message
news:1134761710.751256.15600@g47g2000cwa.googlegroups.com...
.....
Wealth comes from having things. If I have stuff, I'm wealthy.
Hi,
Close, but having more wealth is not having MORE stuff. Not more by weight,
say. It is having better stuff: stuff (matter) that better serves my needs
or my interests.
[/quote:1ddc7ca491]
Um, I was trying to keep it simple, you know. The original poster has
little knowledge abou economics (nothing wrong with that, you can't
know it all), so I didn't want to complicate things with convoluted
theories of value.
[quote:1ddc7ca491]
Several years ago it was pointed out in a thread here that the amount of
"stuff" that Americans have (on average, by weight) has not changed in the
last hundred years or so. What has changed is the ability of their "stuff"
to satisfy their wants and needs. A car rather than a horse drawn wagon or
carriage. A heavy cast iron wood burning stove replaced with an electric or
gas range, etc. We are "richer" now because we have "better stuff" rather
than "more stuff". Wealth is in the way matter is organized. Wealth is
created when trees => lumber, ore => metals => manufactured goods, sand =
microchps in computers, etc.
Wealth is decreased when houses => ashes and CO2.
.....The only
way to get stuff I want, is to first make stuff that others want, then
trade with them.
Unfortunately not the ONLY way. You can steal from others.
....Money is simply an easy way of doing this trade;
barter is too complicated. Money is only a symbolic representation of
the value of the stuff.
Yes.
.....Money is NOT fixed. As more stuff is
manufactured and traded, the central bank will mint more money, so
people can trade.
The central bank does not HAVE to, but they should, so as to try to keep
overall prices approximately constant. That is, they should try to keep the
volume of money growing at about the same rate as the growth in wealth. At
least that is what "monetary theory" claims ;-)
....As technology progresses, productivity increases, so
we make more stuff faster.
Not just "more" but BETTER stuff. And not so much FASTER as with less
human labor.
...That's how economies grow. Can't put it in
simpler terms.
,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@wisc.edu) Madison Wisconsin USA.
This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good
time call: http://www.geocities.com/capitolhill/4834[/quote:1ddc7ca491] |
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