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Flip McWho
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New Zealand
May 2002
time: 17:21
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Yes there is no reason to non conform just because you wanna be a rebel. At the very least have decent ideas behind you.
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Flip McWho
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New Zealand
May 2002
time: 17:21
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Yeah, it can be entertaining crushing their rebellious dreams.
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aneeshm
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Indore , Madhya Pradesh
Jul 2001
time: 10:51
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Another way to say this : I have something of value (anything , doesn't matter) . Now , the US government , in a fit of madness , decides to issue the country away on the stock market . The value of the stock rises or falls with the American economy ( ridiculous , I know , but bear with me ) . A person who owns this stock effectively owns a chunk of America .
Now , the American economy grows by 7 % , and American inflation is 3 % . Assuming the inflaiton adjusted return is 4 % , then has nto my money grown by 4 % ? Hasn't the entire pie grown by 4 % , instead of the pie just being redistributed ?
Is this not , then , the time value of money ? Has not the money grown ?
OK . Another way , then .
Imagine a country having a fledgling economy . The availability of capital is virtually nil , thus no business can start . It's growth rate is less than 1 % . Inverstors who could have invested have kept thier money with them , with the sum total of uninvested money being k . After five years , they barely have more than they started with .
Now imagine thae same thign getting a large infusion of cash/capital , equal to k . What happens ? A hundred businesses start . Half fail . And the rest make the growht rate skyrocket to 5 % . This means that it was the capital k that caused the growth , and the consequent growth of money . Now , they have considerably more than they started with .
What caused this difference ? The capital k and it's investment . Do you agree ?
Last edited by aneeshm on 11-10-2004 at 14:36
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:21
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You guys are totally wasting your time with a Kidicious thread. Didn't I give it the Official DanS Fvcked Up Certification right at the beginning? I can definitively say that he hasn't added anything of value in the preceeding 15 pages of posts, even though I haven't read them.
The only thing we have to know is that inflation + time value of money + risk premium = interest. Inflation + time value of money = government bond interest rate.
Last edited by DanS on 11-10-2004 at 19:04
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Kidicious
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Diety of Kidiverse
Mar 2003
time: 21:21
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quote:
Originally posted by aneeshm
Desirability as in how much you desire a good , not how much you tend to buy it .
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True
quote:
ov is necessary because we tend to percieve increased value when the objective value is higher - as in a different value perception for a gold watch than a steel watch - when both took the same amount of work to produce . And the value tends to decrease in your eyes when you realise the cost is way highet than a normal watch , thus your valuation of "this is worth it" goes down .
For the producer , pv = w + ov , becsue he values his investment in it .
Satisfactory ? |
His work is his investment. He paid for the non value added costs with money that he earned with his labor.
Conspicuous consumption is an interesting point, but it has nothing to do with the producer. Still, it really has nothing to do with creating value. What ever true value the consumer recieves is created by the producer. btw, gold takes much more work to extract than iron.
quote:
Another way to say this : I have something of value (anything , doesn't matter) . Now , the US government , in a fit of madness , decides to issue the country away on the stock market . The value of the stock rises or falls with the American economy ( ridiculous , I know , but bear with me ) . A person who owns this stock effectively owns a chunk of America .
Now , the American economy grows by 7 % , and American inflation is 3 % . Assuming the inflaiton adjusted return is 4 % , then has nto my money grown by 4 % ? Hasn't the entire pie grown by 4 % , instead of the pie just being redistributed ?
Is this not , then , the time value of money ? Has not the money grown ?
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The value of the money has grown true. The money didn't create any of that value anymore than it did before stock in the US govt was issued. Only a transfer payment has been made where it wasn't made before.
quote:
Imagine a country having a fledgling economy . The availability of capital is virtually nil , thus no business can start . It's growth rate is less than 1 % . Inverstors who could have invested have kept thier money with them , with the sum total of uninvested money being k . After five years , they barely have more than they started with .
Now imagine thae same thign getting a large infusion of cash/capital , equal to k . What happens ? A hundred businesses start . Half fail . And the rest make the growht rate skyrocket to 5 % . This means that it was the capital k that caused the growth , and the consequent growth of money . Now , they have considerably more than they started with .
What caused this difference ? The capital k and it's investment . Do you agree ?
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Are you saying now that the central bank creates value by increasing and decreasing the money supply?
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aneeshm
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Indore , Madhya Pradesh
Jul 2001
time: 10:51
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I'm not talking about a central bank , but about a group of mutual funds , under a common leadership . If they had not invested money , then the quantum of money would have remained almost constant ( money owned by the economy + capital k owned by mutual funds ) .
If , however , they invested the money , then the quantum of wealth would have been ( money owned by economy + capital k + growth of 4 % ) .
This growth tends to compound over time . That is why a small amount invested can grow almost exponentially over a long period of time .
I hope we both agree that the supply of capital caused the growth of the quantum of wealth .
That is actually how the capital k created the money ( the growth of 4 % ) , because the people were working the same amount before and after , but the capital invested caused the same work to give higher returns .
How is that , you ask ? It's like this . A producer has no capital , thus is working for a wage . Now , this same producer , getting the necessary capital , starts production , and causes a increase in the quantum of wealth . The work he did both times was the same , but the capital caused the same work to give higher returns . This is why the availability of capital can exponentially increase the growth potential of an economy , given the same amount of work , like in my example of the fledgeling economy . Everything else remaining constant , capital availability tends to create wealth proportional to the amount available .
Ultimately , this is how wealth creates more wealth . If you disagree , please tell me why and how .
Last edited by aneeshm on 11-10-2004 at 21:51
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David Floyd
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The bottom of a large bottle of beer
Jan 1970
time: 05:21
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quote:
It's got nothing to do with agreeing. When you say something like "Everyone agrees with this so it must be right." Then you are a conformist because you are making the value judgement based on what the majority of people believe. |
But that's the inherent nature of value! Overall, it's about what the majority believe. Granted, individuals can have different beliefs about value, and those beliefs can have influence, but overall, value is determined by what the majority thinks.
If 80% of the population decided that US currency no longer had value (hypothetically), then it, simply put, wouldn't. No one would work for money, and no one would accept money in exchange for goods and services.
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11-10-2004 11:57
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