The attention that I’ve been paying to economies during the recent financial troubles have got me thinking…
…can you actually ‘make’ money?
Sure, if you work, you get paid…..but that is money somebody else had that they exchange for your labour.
If you turn a lump of clay into a vase and sell it somebody else gives you their money in exchange.
If you lend somebody money and they pay interest again somebody else gives you ‘extra’ money that they had when they pay you back.
Even if you dig-up a gold nugget somebody else gives you their money in exchange for it.
So can you actually ‘make’ money…..or is there a set amount of money that we all just move about?
[I know that there will be some complex global monetary creation/exchange mechanism involved somewhere but, to me, it seems that that mechanism has very little connection with the actual process of commerce that we’re all striving at to produce ‘growth’.]
By: charliehunt - 23rd April 2013 at 19:11
[QUOTE=Matt-100;2017415 people desire to be richer than they deserve to be[/QUOTE]
I am not sure what that means. Most people will want more than they currently have. But by what measure do you judge whether that desire is deserving or not?:confused:
By: Matt-100 - 23rd April 2013 at 18:09
What I find very amusing is GDP “growth” has almost a direct correlation to the rate of inflation. For most of the past decade we’ve been hovering around 1-3% inflation… funnily enough that’s also what our GDP’s been doing.
Now look at Japan, Inflation at -1-0% over the past decade… their GDP? It’s done the same…
It’s not just here in the West, look at the emerging economies like China… 7-8% inflation, 7-8% GDP growth. No matter where you look, the story’s near enough the same.
If you look at inflation adjusted mean household incomes for the US, you’ll see they’re actually worse off than they were 40 years ago.
As MSphere rightly points out, people desire to be richer than they deserve to be. Workers and governments demand higher pay, so employers give them the extra salary… The flip-side of this; is what could be made for £5 before, now takes £7 due to the increase in labor costs. So when those same workers go to the shops to buy the products; instead of the RRP being £7, it’s now £9.
People aren’t any richer than they were before the wage rise, but they feel richer and that’s what matters.
By: MSphere - 23rd April 2013 at 09:39
This is a question for the National Bank of each particular country. New money is being generated, of course, there are exact mechanisms defined for this process. In ideal case, the increase of money should be perfectly correlated to the increase of work productivity. In real life, the increase of cash flow is larger than the increase of work (people desire to be richer than they actually “deserve” to be) which leads to decrease of the buying force per currency unit = this is called inflation.
Based on that one would think that inflation is an undesired process but things are not that simple. Basically, inflation forces even rich people to work/invest further to retain their current status. Imagine you had a million pounds today – if there was zero inflation, or even deflation, all you would need to do is to hide the money under the pillow and wait to get comparably richer with time without working. This is what the system aims to deter.
By: Edgar Brooks - 23rd April 2013 at 09:19
The Royal Mint does.
By: charliehunt - 23rd April 2013 at 09:09
Maybe a naive answer but essentially people are “wealthier” than they were 50 years ago or 500 years ago in real terms so presumably there is more “money” being generated in the world for that to be the case.
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April 23, 2013 at 9:02 am