[prepend]

I’m not sure how to teach this directly through comments as there are so many ways to create wealth to increase the overall value. Khan academy has a decent series on microeconomics [0] that will take an hour or so to view.

I think the simple view is wealth is zero sum. I have a pie and there’s only eight pieces. If I have seven pieces then you can only have one. Easy enough to split the pie and we both have equal amounts. But it’s not possible for you to have more pie without me having less.

In the real world it is possible to create value. And the things human value are intangible. So if you paint pictures and I sing songs, you paint 5 pictures, I sing you five songs we are both happier and have more value. I can’t paint so I value a painting at 100 whuffie. You can’t sing so you value songs at 100 whuffie.

In economics they can this guns and butter and use it as an example of trade increasing wealth.

If country X is really good at making guns but marginal at making butter and country Y is really good at making butter but marginal at guns they have to allocate labor to make both since everyone needs guns and butter. So each country makes $100 worth of goods at the total value of $200. However if country X only made guns and Y only made butter they could exert the same labor but have $400 in total value. Neither country is worse off.

This works in part because money is imaginary to reflect how people value things.

This works more with no tangible things that can be reproduced so it’s quite possible for someone to make a trillion dollars worth of software without taking a trillion dollars away from somewhere.

[0] https://www.khanacademy.org/economics-finance-domain/microec...

[NTDF9]

I think you are missing the point. Wealth is almost only restricted by natural and human resources.

However, getting paid in a currency is directly limited by total currency in circulation. Of the total items of wealth in the world, if more and more currency is hoarded at the top 1%, only the top 1% can afford the wealth created by the rest.

In other worlds, wealth is increasing but the purchasing power of it is not reaching everyone proportional to the wealth they are creating.

[prepend]

I think if you watch those videos you will learn that getting paid is not limited by total currency in circulation both due to velocity of money [0] and due to non-currency assets that people get paid in (IP, stock, etc).

In the scenario I described above each country could spend all their wealth if they do desired. Nations constantly create money and handle deposits so even if they wanted it all in cash that they never spend (which no one does) they could do that in both the $100 and $200 scenario because as nations they can create currency. If the currency is backed by wealth of nations then inflation is less (ie, a country printing $100 with $1 in wealth is in trouble, but a country printing $100 with $100 in wealth is less in trouble).

Fortunately, while these concepts are a little non-intuitive, it’s possible to study, learn, and use them to influence our decision. Or to help me decrease confusion on the relationship of purchasing power and wealth.

[0] https://en.wikipedia.org/wiki/Velocity_of_money

[NTDF9]

You need to think a little beyond velocity of money. Velocity of money causes inflation/deflation. Printing currency reduces interest rates which indirectly causes more borrowing which indirectly causes more spending, thus increasing velocity of money.

All of this still isn't related to the article which is talking about unequal distribution of wealth.

Sure one way to solve this unequal distribution is handing more money to poor directly by printing, but thats bound to cause inflation.