Ukip! Ukip! Ukip!

[DodgyAgent]

Money != wealth.

wealth is determined by amount of money

[darmstadt]

wealth is determined by amount of money

Not necessarily:

'Wealth' refers to some accumulation of resources (net asset value), whether abundant or not.

As you may, or may not, be able to ascertain from the above statement, its not just about money but about resources. Therefore if group A has an resource A which group B require an group B has no money but resource B which group A require then a trade can be made, or are just pointing out that you're not wealthy as you don't have (a) either money nor (b) a resource required by others whereas a contractor is wealthy not only because they have money but they also have a resource, their skills, required by others

[doodab]

Either you misunderstand the nature of a ponzi scheme, or the nature of investment. If you invest some of your slice of the pie to help someone grow the entire pie bigger, then your reward is a chunk of that new pie growth, greater than the original bit of pie that you had to give up. There's nothing ponzi scheme-like about that.

But it appears that in the real world with a free market setting the price for capital people expect their slice of the pie to grow faster than the overall rate of pie growth. Even the lowest risk investments (e.g. gilts) usually return a premium over the growth rate. You might argue that this is due to a "scarcity" of capital but there need be no such scarcity in a fractional reserve system. Capital may have been scarce in the past but that's no longer the case, modern "financial engineering" as it were has effectively managed to create an infinite supply of it. Hence it's overvalued, and in particular it's overvalued relative to labour.

[DodgyAgent]

But it appears that in the real world with a free market setting the price for capital people expect their slice of the pie to grow faster than the overall rate of pie growth. Even the lowest risk investments (e.g. gilts) usually return a premium over the growth rate. You might argue that this is due to a "scarcity" of capital but there need be no such scarcity in a fractional reserve system. Capital may have been scarce in the past but that's no longer the case, modern "financial engineering" as it were has effectively managed to create an infinite supply of it. Hence it's overvalued, and in particular it's overvalued relative to labour.

Whatever it does it makes a pretty penny for IT contractors

[SpontaneousOrder]

wealth is determined by amount of money

Really? So who out of these two men is wealthier? Everything else being roughly equal.
a) A man in 2014 with an iPhone and £100 in his pocket, or...
b) A man in 1980 with ten grand in his pocket.

[SpontaneousOrder]

l but there need be no such scarcity in a fractional reserve system. Capital may have been scarce in the past...

Capital and money are NOT the same thing. Creating new money does not somehow magically create capital. The 'best' it can do is to steal capital from somewhere else.

This misconception is why your reverse tide example is incorrectly attributed to capitalism.

[doodab]

Capital and money are NOT the same thing. Creating new money does not somehow magically create capital. The 'best' it can do is to steal capital from somewhere else.

Perhaps it's the blurring of this distinction that is responsible for what I am describing.

Any capital good can be given a price, in money. In the modern economy where the primary form of investment is money, money itself is given a price and rewarded for existing and capital need not have a physical manifestation, they are effectively interchangeable.

[SpontaneousOrder]

Perhaps it's the blurring of this distinction that is responsible for what I am describing.

Any capital good can be given a price, in money. In the modern economy where the primary form of investment is money, money itself is given a price and rewarded for existing and capital need not have a physical manifestation, they are effectively interchangeable.

That's the thing. Money is a token of ownership - of goods and/or services yet to be delivered. Every £10 note in your wallet represents a debt that someone somewhere has incurred, and we trade those tokens of debt.

If we were using gold or silver for money, its effectively the same thing - while the gold may not necessarily have been created as a debt (like our paper money is), the gold, qua money, represents the deferred consumption of capital (someone's labour or resources).

We live in fiat paradigm where we're forced by various means to participate in an economy based around paper money created in a fractional reserve system. It's fraudulent (we have no choice but to participate in this system) because the creation of new money doesn't create new capital - it dilutes existing claims on the same capital. Moreover it benefits the rich at the expense of the poor because that newly created money tends to find it's way into the economy with the richest first - who get to exchange it for real capital one way or another - before trickling down throughout the rest of the economy. The further it trickles, though, the greater it's influence on price inflation so that by the time it finds it's way to the poorest that same money is now backed by less real capital which is now priced higher.
In this way wealth is systematically transferred from the relatively poor to the rich few in privileged positions.

This, though, isn't a problem with capitalism - it's a problem with oligarchs backed by the state force wielded by politicians who like to buy votes with imaginary wealth that can be created with the click of a button.

I've not got charts in front of me, but I know that the M2 money supply (in the US at least) goes exponential after coming off the gold standard, and I would guess that if you overlaid wealth disparity charts over the top you'd see a very strong correlation.

With that being said, when you bear in mind the general increase in wealth of poorer people which isn't measured in money, we're still generally better off than we used to be. But we should be ALOT better off. Most prices should be constantly falling. We should be enjoying general deflation.

[DodgyAgent]

Really? So who out of these two men is wealthier? Everything else being roughly equal.
a) A man in 2014 with an iPhone and £100 in his pocket, or...
b) A man in 1980 with ten grand in his pocket.

£5000 a year benefits - poor
£500,000 a year Rich
£5 million a year very rich

yes of course value of money is just as important but I was trying to keep my point simple.

[SpontaneousOrder]

£5000 a year benefits - poor
£500,000 a year Rich
£5 million a year very rich

yes of course value of money is just as important but I was trying to keep my point simple.

Well the point I'm trying to make is that king tut with his 5 million (adjusted for inflation) might be considered a pauper compared to a modern man on 50k today. Comparing wealth in terms of money & money equivalency only works if you make quite a broad set of assumptions about the people being compared.
A man in a ferrari & nothing else, in the middle of a desert, might be a pauper compared to a peasant who owns a small hand-dug well & nothing else.
Th point being that you can't necessarily just observe wages falling from generation to generation and conclude that the newer generation is less wealthy than the previous ones.