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by NTDF9 2438 days ago
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.

1 comments

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

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.