[splintercell]

It does. When you hide money under your mattress this is equivalent of you giving your money to all the US dollar investors out there in proportion to the amount of investment they're making.

So let's just say if there is a small economy where there are only two investors you and Elon Musk, and you decide to skip investing in any business and hide money under the mattress, then this is equivalent of you giving the money to Elon Musk to invest in his business. How? Because now you're not competing him for raw materials, labor and capital.

Then when he built self-driving cars and economic growth happens because of this productive activity, when you take your money out of your mattress it is now worth more , and I'm presuming no new dollars were produced and this time.

You can see the effect if a major stockholder of a company decides to not participate in the functioning of the company, this in effect is equivalent of him lending his stocks to the other stockholders. This does not mean that somehow the company is working at a reduced power.

[Enginerrrd]

Ah ok I see your angle now, but I think there's a critical flaw.

Your investment into the general market is really only the amount of interest earned on deflation of that amount.

Compare this with investing the whole amount into a local bakery. The utility difference is dramatic.

[splintercell]

> Your investment into the general market is really only the amount of interest earned on deflation of that amount.

Your investment is the whole amount which would have purchased the 3 components of production (land/labor/capital), because the price of all these goods have fallen, which have allowed other entrepreneurs to buy them for their own investment.

What you're saying is like telling people who invest in index funds only that their investment is only the interest on the yearly return they get from the fund.

[centimeter]

> Compare this with investing the whole amount into a local bakery. The utility difference is dramatic.

I do not agree that the utility difference is dramatic. The utility difference is closely proportional to the difference on expected returns.

[realcr]

I really enjoyed reading this.

[splintercell]

Lol, I should tell you about my thought experiment of capitalist society of perfect inequality (or how it would be an amazing place to live).