Re:Why Inequality Matters
by logfromblammo on Thursday October 16, 2014 @02:33PM
(#8466507)
Because the money on one side of the sheet exactly balances the new ownership stake on the other. There is no goods or services gradient that makes the cash flow.
If a business is already bound by the abilities of its personnel rather than availability of resources, the investment won't do anything at all. If you buy 50% of a business with cash that makes it now worth twice as much as it was worth before, you haven't done anything more than move the cash you own in your own name to the cash you own in the name of your business.
That's not spending. That's just playing a shell game with yourself.
Loans are similar in that you are exchanging current cash for future cash of roughly equal value.
To create a cash flow in the economy, there has to be a gradient between producer and consumer. Food flows from farmer to eater, so cash flows back from eater to farmer. The eater cannot resell his food to someone else after he has eaten it. The eater has to produce something--some form of good or service that someone else can consume--in order to pay the farmer. Maybe the farmer gets sore feet. The eater could sell foot massages. Goods and services flow in one direction, and the cash flows in equal amounts in the opposite direction. And it mostly balances out.
Money can't just move around. It also has to change owners.
If a business is already bound by the abilities of its personnel rather than availability of resources, the investment won't do anything at all. If you buy 50% of a business with cash that makes it now worth twice as much as it was worth before, you haven't done anything more than move the cash you own in your own name to the cash you own in the name of your business.
That's not spending. That's just playing a shell game with yourself.
Loans are similar in that you are exchanging current cash for future cash of roughly equal value.
To create a cash flow in the economy, there has to be a gradient between producer and consumer. Food flows from farmer to eater, so cash flows back from eater to farmer. The eater cannot resell his food to someone else after he has eaten it. The eater has to produce something--some form of good or service that someone else can consume--in order to pay the farmer. Maybe the farmer gets sore feet. The eater could sell foot massages. Goods and services flow in one direction, and the cash flows in equal amounts in the opposite direction. And it mostly balances out.
Money can't just move around. It also has to change owners.