Wednesday, February 20, 2008

Wealth is created

Well, I have tried to figure out how the entire economic works (mainly try to profit from the stock market but failed). Yesterday I suddenly had an idea. Wealth is entirely created. Any wealth that is not part of our basic needs is totally imaginary.

Now here are the base of my theory:
1. When there are not enough for our basic needs, we must spend our entire time for those (gather food, find cover). However when our basic needs have been met, people will start to have extra demands. Mainly better living conditions and entertainment.
Both are CREATED. You need creative minds to give us better/cool things to live for and desired. Desire generates spending.

2. Money is only a media for us to get what we want. Money itself has no meaning. If there are enough people to create wealth (or items to be desired), Government can print a lot more money and still cause no inflation, because there are more items to be desired. An ultra simplified example will be, before there are $100 on the market and 100 items people want, so each cost $1. Now government prints $900 to balance its budget but people has created 900 items that other people want, so each item is still $1.

3. When we enter the industry world, machines start to take people's job away. Well, another way to see it is machines freed people to do other things! For example, a factory that produce cars need 1000 people to run before, and with machines it only needs 1. Now not only the car produced is cheaper, there will be 999 people who are free to invent/create other things.

So who lives better? An ultra rich guy 200 earlier or a poor guy in current US?
The rich guy might be rich but he doesn't have electricity, toilet and all the other convinces, how much gold will that rich guy willing to spend to get all the cool stuff we have today? So each of us are rather rich :-)

No comments: