As is made abundantly clear in my reply to your other comment, it is you that is confidently wrong and it’s an important issue.

Here’s how it works: people work in exchange for much less than the value they produce.

That surplus value is turned into profit for the company, exorbitant salaries for executives and stock market value. Those are the sources of income that makes a billionaire.

No matter how and where a billionaire started, that is how they became a billionaire: value produced by other people becoming wealth for one person. And a shitload of hoarding, of course.

Statistics document reality, they don’t change how it works.

And what my statement was meant to convey is the fact that the ventures you so laud are all reward and no risk for the rich and all risk and no reward for the poor.

If it had been a game of crabs, the rich would be rolling 4 loaded dice, picking which two count after throwing. The poor would have one dice at most, the most beneficial numbers missing at all times.

Your problem is you’re starting from the position that money is bad, and you’re finding arguments to support that.

Actually, I’m starting from the position that there are basic physical constraints on productive capacity no matter what, and while a well-functioning economy might utilize that more efficiently, no amount of dollars changing hands is going to break the laws of physics and just magic a more efficient powerplant or a larger workforce or more arable land into existence (without competing with and detracting from anywhere else).

In a functioning industry, more demand creates more profit incentive which causes businesses to produce more, bringing prices into equilibrium.

Duh. But that’s not relevant to this discussion.

“A functioning industry” is a subset of “the economy”. You seem to ultimately be implying some kind of infinite or free growth, which is sorta fine for modelling just one industry, but resources are very finite on the whole, and increased demand for shared resources by one specific industry, by mathematical definition, leaves less available for everything else.

That is why and how it is possible for businesses in a specific industry to produce more to meet demand, and bring prices (mostly) into equilibrium. (Though note “equilibrium” has nothing to do with affordability, or fairness, as you seem to possibly be implying it does.) It is also why trying to apply this logic to the entire economy as a whole doesn’t really fit.

The recent inflation we’ve seen has been a result of price gouging by businesses. Businesses use “inflation” as a justification for raising prices but not wages. It’s not real, it’s just massive collusion.

I’m aware of this. I also don’t see how it’s significant for the hypotheticals/topic at hand.

The role of government is to prevent that. And to prevent inefficient or undesirable allocation of labor and money, by taxing and subsidizing and fining and regulating. So the rich want everyone working on yachts and no one working on roads? Government taxes yachts until it’s too expensive to maintain them, and government subsidizes road contractors who offer generous payment terms.

I think you’re moving the goalposts. The discussion you started was about which spending habits for “rich people” would be the least societally damaging, by “benefiting the economy”. If you’re going to just say “government intervention” to limit the harm, then we may as well just say “wealth tax” and be done with it.

Also, economies with high wealth inequality tend to have ineffective or corrupt regulators already. So suggesting regulations could be used to limit the harm of what you were advocating for in examples of wealth inequality… Seems discombobulated, on multiple levels.

Conversely, if somebody has $100 trillion-gazillion dollars just sitting in a vault somewhere, but they never spend it and none of it ever sees the light of day, while they instead live in a shack spending no more than a couple thousand dollars a month, then for practical purposes it’s effectively like that money doesn’t exist, right?

Absolutely not. You clearly know what the velocity of money is so how could you possibly think that? Maybe you just heard the term somewhere.

Dude. The MV in MV=PQ is multiplication. it’s literally commutative. You’re actually right that I’m not fully as well-versed in economic theory as I could be, but assuming that basic algebra works the same in economics as it does anywhere else in the universe, reducing the velocity of money is literally, by mathematical definition, indistinguishable from reducing the supply of money.

If $20 is circulated only once in a year and only purchased one $20 meal, it only stimulates one meal’s worth of demand and only pays 1 meal’s worth of wages. If it’s circulated twice…

If it’s circulated twice, then it still pays for only one meal, which now costs $40 instead of $20— Because it turns out you only had enough people planting crops to make one meal in total.

(If it were circulated twice in the food sector but not in other industries, then you might be able to buy one and a half meals for like $30 per, by retooling more of the economy for food production, at the cost of reducing supply and probably increasing cost in other industries— But if it’s uniformly circulated twice in every sector, as is closer to what you’re suggesting, then there’s no profit incentive to retool anyway, so literally all you’re doing is creating inflation.)

Q remains effectively constant, because Q is bound by the productive capacity of the economy, as limited by basic physics (barring external factors like demographic and technological change), so only M, V, and P can really change in the short term.

Money that is removed from the economic cycle is money that is not being used to support it. The faster the cycle goes (the greater the velocity of money) the more good it does.

Saying “support it” and “faster the cycle” is entirely allegorical and metaphorical in this context, and doesn’t even pretend to have any rigorously formulated or defined meaning. So I can’t really respond to it directly. But the anecdote you followed it with is unsubstantiated and apparently basically nonsensical, and the personal insinuation you made right before it seems to fly in the face of the basic algebra it’s referring to.

Again: Money isn’t real. Steel and wheat and turbines are real. You can’t just magic’ up “more good” by making more money spin around in a circle; All that will accomplish is to make each unit of money worth less, because it still has to map to the same amount of goods and services in physical reality.

Not to mention the whole “there’s only a limited pie of goods” view caused incredible suffering in the 1600s and 1700s when European nations decided they wanted to grab the biggest slice they could.

Productive Capacity ≠ Imperialism!!!

Trying to equate the two is just bizarre…

---

I started writing a response because your tone sounded like you knew what you were talking about,

But really, what you’re asserting would probably require breaking a couple laws of thermodynamics, and also seems to be directly contradictory to the basic mathematical formulation and economic description of what you’re talking about.

…Ah, fuck it.

The 1600s called, they want their economic theories back.

Conversely, if somebody has $100 trillion-gazillion dollars just sitting in a vault somewhere, but they never spend it and none of it ever sees the light of day, while they instead live in a shack spending no more than a couple thousand dollars a month, then for practical purposes it’s effectively like that money doesn’t exist, right?

Absolutely not. You clearly know what the velocity of money is so how could you possibly think that? Maybe you just heard the term somewhere.

Fifth Grade called. They want you to redo the bit on multiplication, so you won’t try to claim (nM)V ≠ M(nV).

Though I will caveat that as modern national economies aren’t closed systems either, rich people in those nations “spending all their money” may well actually help their countries as a whole too, just in less of the “benefiting the economy” way you were suggesting and instead in more of the “incredible suffering” way that you ironically tried to condemn.