Gold supplies have never been static, as new supplies were being mined over the past few thousand years. There is no need to hector me about supply and demand and. There’s no need to show off your grand eloquence with economic theory. I know a little about theory myself, and I’m a professional trader with exchange memberships, so spare me the lecture.

you said,
“Given that we consume things, use them up, burn up what’s there, prices for certain things goes up. Things that are common and renewable tend to have static low prices”

You ought to quit before you put your foot in your mouth some more.

By the way, in that “false” statement, see if you can understand just why all the banks are failing on Wall Street, hmmkay? Why they aren’t really worth what they say they are, why they need over a trillion dollars of bailout money, and why they are fighting to keep anyone from looking at their books.

Oh, and see if you can find when they started REALLY cooking those books, and “generating the most wealth”. I don’t think you’ll find any direct correlation to deregulation and inflated numbers on the books.

Is false. I stopped reading. Thanks for the nice chat. I’m not coming back here.

If you “sell” your business, you have no more revenue stream. Your business is “worth” something because someone else wants to have the transfer of wealth go to them instead of you, and the amount of wealth transferred over time is more than the “purchase price” they pay, right?

With your “example” numbers, it would take 1000 days for them to get their money back. And if in 250 days no one wants to play dice any more, he just lost a lot of money. You gained, he lost..

And where did that come from in the first place? Where did he get that $100,000 to give to you? The origin was rooted in natural resources.

And it’s only worth $100,000 if someone is willing to pay you that, if no one else wants to pay you that, it’s not worth that. Hence, it’s not “real” wealth, it’s speculative wealth.

One of the core “rules” that’s used to “value” a company is the “price of HARD assets”, not “potential”. The potential is subjective, and only worth something to an individual looking to buy you out.. from an investment perspective, you have to make VERY clear it’s SPECULATIVE, or you are basically lying to people. The rules that are used to determine just how “speculative” something’s value is is what we call “regulations”. When you remove regulations, you are basically telling someone “make up whatever you want, it’s ok.. no one will care”. Then next thing you know the entire market is collapsing because everyone made shit up so they could transfer more wealth to themselves while not really having anything to back it up. Kind of like your fictitious dice game.

See, you’re trying to get into advanced topics of economics without looking at the base factors. Your example is a “business that transfers wealth”, it doesn’t create anything. The “created value” of the overall company is arbitrary, the “real value” is only based on its physical assets (the cost of a pair of dice).

At the end of the day, all wealth is tied back to resources. Land, minerals, water, air space.. Transforming resources into other usable items is the base for any economy (or should be). If you have a services based system, someone else can and will perform those services for less, and all of a sudden you have a lot less worth than you did yesterday. But if you have physical resources that you make into something else, you have something with a lot more likelihood of being in demand, and something others don’t have to offer.. Think oil in the Middle East.

In America, we’ve sent our “production” jobs away, so we don’t transform resources any more. We mostly transfer wealth, and those at the top of those companies make sure to transfer most of it to themselves. That doesn’t seem fair.

NO, wealth is transferred. You gain, I lose, that’s not a net gain, that’s the definition of transfer.

obama, mccain, smith, and buffett would agree with this.

as for the fongolium mine, sure… that owner might be really rich.

Perhaps because there are more and more people, but no more gold. More demand and no increase in supply..

Hmm.. where did I read that before.

That ties right back to supply and demand. Without Joe’s invention, there is no real demand and you have squat, right?

And I do believe I mentioned “adding value” via transforming natural resources into something more useful, exactly what you just said. But at the end of the day, we only have a limited amount of resources. 100 years ago it looked like we had LOTS, but then we started exploding in population. We’re at near full capacity for food, did you realize that? The planet is projected to hold about 8 billion people, we’re at 6.5 billion now. Pretty soon (15 to 20 years) a loaf of bread could cost you a full day’s work.

You’re not looking at the fact that we have finite resources, therefore a finite ability to add value to things. And once a resource becomes scarce but is in high demand, it’s “value” goes up, as does the “wealth” of whomever holds that resource. You didn’t “create” that wealth, simple demand did.

Sorry, that’s wrong.

1) gold backed currency:

Gold’s value goes up over time. Currency inflation of about 3%/annum is normal and balanced (too much more and too much less each has problems).

Therefore, you MUST print money to stay balanced with gold. So even though you’re right that few currencies are backed by something like gold, you’re wrong about the rest of it.

In addition, gold is added to the reserves (the amount of gold backed at Knox, for example) over time.

2) … pretty much all wealth in the world is tied to natural resources …

get this in your head: “wealth” is the total of your assets of value. “value” is what someone will pay in the marketplace.

So, is $3 of coffee from Starbucks worth $3, or worth more than the $1 from Dunkin Donuts? That cup of burnt beans and over-milked sludge is worth three times the cup from Dunkin, though the costs are probably similar. That’s value.

You can CREATE value! Get this “there’s one pie, divide the pie more equally” idea, and flush it. You CREATE pies.

As for “we consume things.” Sure, but services have value too. Your “resources” argument might hold true in the billions-of-years scale, but not in normal economics.

Another point about “resources”. Fongillium might make great jewelry. So the fact that I own a fongillium mine means that I have certain wealth. But Joe the plummer figured out a way to use fongillium to make … I don’t know, trilithium. That knowledge, the way he markets it, the fact that trilithium powers the enterprise makes his wealth far more than mine.

It’s not about that’s it’s 10 pounds of fongilium vs. 10 pounds of trilithium. It’s the fact that Joe turned something of value into something of even more value!

The statement “it’s obvious to anyone with ability to reason that we have a distinctly limited total wealth available to us” is the foundation of very bad though, bad policy, and just shows the lack of understanding that value and therefore wealth are created.

(No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.) (Section in parentheses clarified by the 16th Amendment.)

It’s “commonly accepted” that the 16th allows the “income tax”, but if you study the times when the 16th was written, it’s clear that it was intended to shut down a “loophole” that businesses were using. The court cases of the time established that “wages for labor” weren’t income, they were the fruits of your labor and not taxable. The large companies of the time, being run by just as shifty of dirtbags as we have today, reasoned “if my employees exert labor to add value to resources, then the end result can’t be taxed because the income was derived from labor”.

The 16th clarifies that “income” (not wages from labor) is to be taxed regardless of the “source derived”, to close the loophole the companies were using.

By the nature of the Constitution, no one article/Amendment can contradict another or the entire document becomes nonsensical, right? The 16th can NOT undo Article 1 Sec. 9 simply by contradicting it. The graduated “income tax” on “individuals and their labor” is, in fact, unconstitutional.

That we let our Congress declare that companies are “people”, and deserve the protection of the Constitution is where things got really ugly. It also made it appear that taxing individual compensations for labor was reasonable. .. and you’ll notice from the original tax codes when taxes were first illegally imposed on the masses (in 1913) that there was an “exemption”… a value where if you made less than that amount in a year, you had no taxes. That amount was $2,500. Over the last 105 years, that amount hasn’t been adjusted to keep in line with inflation.. In today’s terms, it’s well over $150,000 a year that was meant to be exempted.

The “income tax” was mostly meant to gather money from companies. It wasn’t mean to take money from the average Joe. Imposts and excise taxes and other taxes (consumption taxes) were meant to do that, things that allowed someone to pretty much opt out of paying based on their purchase decisions.

When gold was backing money, it was fairly static.. which is why they moved off the gold standard, to “create” more money. As they did that, value changed dramatically and we have rampant inflation. Prices artificially change because more dollars are fabricated out of thin air, so those that hold physical items want more dollars.

Prices naturally change (despite your assertion) based on demand and supply, what someone is willing to pay. That fundamental premise of Economics holds true in all models, it’s perhaps one of the only truths in the entire field (all the rest is mostly theory and coincidental observations, superstition that can’t be trusted to function in a vacuum). Given that we consume things, use them up, burn up what’s there, prices for certain things goes up. Things that are common and renewable tend to have static low prices.

Since pretty much all wealth in the world is tied to natural resources in some manner, it’s obvious to anyone with ability to reason that we have a distinctly limited total wealth available to us. You can’t create resources out of thin air, you only have what’s left over from the Big Bang.

Next thing you’ll have some idiot in congress calling for the investigation of politicians who are suspected of being un-American.

Wait – been there, done that. Joe McCarthy – and Michelle Bachmann.

Of course wealth can be created, as well as value can be created. The actual amount of money out there is immeasurable, despite what some economists claim.

If wealth were static, the money supply would remain static, prices would never change, and the civilization would fall apart.

Jeff

palin: from those what have, to those who vote, because I can.

see? not marxist.

You do have it wrong, but it would be very hard to explain well in a comment.

After this brief comment, I’ll try to explain. Take the average billionaire. Does he/she have billions under a mattress? No. They have wealth, which means assets valued at billions.

A short version would be something along the lines of:

I am the government of Fongo (an island nation).
I start a central bank or federal reserve or whatever like that..
The federal reserve prints ~100 (one hundre Fongo fongollars) on banana leaf paper.

There now exists exactly ~100 on the planet.

The central bank then loans that to a local private Fongon bank. That bank now has the money to loan.
That bank loans the ~100 to 10 local business, at ~10 each.

Those businesses buy raw supplies and pay their employees ~5 total, and invest the other half, in some other businesses … or perhaps they put it in the bank which loans it out again (they are required to keep a percentage in the vault).

Those employes use their fongollars to buy food, plungers, and a fongvo (the Fongon equivalent of TiVo).

So uh, how much money is there now?

The other businesses each use their ~4 or ~5 to do the exact same thing! Pay their employees, buy materials, etc.

Each of these businesses has created something, food, plungers, fongvos, etc and they sell it (some of those sales are as mentioned).

The employees make ~1/year for their efforts.
The business that makes the food runs low margins, so the company isn’t worth a ton more than the gross recipts of the business for the year.
The business that makes the fongvo is able to do so at high margin, so they are very profitable, and they are growing. Therefore they are worth ~10,000 on the stock market. One person owns that company, so he is a 10 fongonaire.

So now we have a thriving flowing economy based on 100 fongollars.

In terms of deposits in the bank, just add up all the people that saved money and didn’t spend it. Bear in mind that because the bank loans some 90% back out, each time they loan you are adding currency to the system.

I would guess that there is like ~350 – ~500 in the system. That’s because i buy something, they buy something they buy something, it gets saved and lent out. Repeat. But the saved amount stays. So I save ~2, so I have ~2; but the guy that borrows it has ~1.8, and he pays me to clean his deck. So now I have ~3.8 (and he owes the bank and doesn’t look like he’ll pay it back).

So … I hope this gives you an idea of how money and banking works. Wealth has really very little to do with CASH. Those fongollars is just cash! Wealth has to do with possession of value! If you add up the actual amount of cash on the planet, it is a fraction of the GDP (the amount of money that changes hands) and a fraction of the total wealth (the total assets) on the planet!

A contracting economy means that the GDP is shrinking because of reductions is people buying stuff. That also means that the value of a company that sells that stuff shrinks because it’s based their income, etc.

I have to stop, but I hope you get the idea. You’re right about one thing for sure, simply printing money causes inflation. If you print it and loan it with the right constraints, however, you can allow for the economy to grow. Mind you, it’s grown by the economic activity (things being bought and sold).

HTH

What most people who toss around the “wealth redistribution” label miss is that government doesn’t spend the majority of its “redistribution” on welfare for people not working. In fact, I don’t think public welfare takes up more than a percentage of the budget, though I’m definitely talking out of my ass with that figure. What it does spend money on tends to be intangible to the average citizen, but offering greater returns for standard of living over the long run: investments in public education (working smart instead of working hard), infrastructure maintenance and reform (good roads, non-collapsing bridges, mag-lev trains in the future?), applied sciences and engineering (e.g. the grant awarded NC State University to research “smart electric grids” for renewable energy sources, link), and the subsidizing of the construction costs for new energy needs, hospitals, community centers, and so on.

These things provide benefits that can’t be quantified on an accountant’s ledger. The accountant is concerned with quarterly finances, not the long-run beyond possibly forecasting for the next year. And the free market, as powerful an engine for efficient use of capital as it is, will not provide these things.

So don’t look at the term “wealth redistribution” and see someone getting something for nothing. That oversimplifies what taxes can do if wisely spent, and reaches to the baser, selfish nature in all of us.