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| Some economics questions I have https://gladerebooted.net/viewtopic.php?f=8&t=5359 |
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| Author: | Lex Luthor [ Fri Jan 28, 2011 12:56 pm ] |
| Post subject: | Some economics questions I have |
I was thinking about some things, and wonder if anyone knows the answers. 1) If you have a small isolated country, is it possible for every business to profit? 2) Can stock prices keep going up even if no new money is printed? 3) How could market growth exceed inflation? |
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| Author: | Screeling [ Fri Jan 28, 2011 1:02 pm ] |
| Post subject: | |
I think part of the problem with these questions is they assume that wealth and currency are the same thing. |
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| Author: | Lex Luthor [ Fri Jan 28, 2011 1:03 pm ] |
| Post subject: | |
I just mean from a numbers perspective. |
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| Author: | Talya [ Fri Jan 28, 2011 2:49 pm ] |
| Post subject: | Re: Some economics questions I have |
Lex Luthor wrote: I was thinking about some things, and wonder if anyone knows the answers. 1) If you have a small isolated country, is it possible for every business to profit? Yes. Quote: 2) Can stock prices keep going up even if no new money is printed? Yes. Quote: 3) How could market growth exceed inflation? Wealth is not static. Screeling wrote: I think part of the problem with these questions is they assume that wealth and currency are the same thing. Exactly. So long as new wealth is being generated faster than it is being consumed, this is possible. For example: (1) Natural resources are harvested and sold. Net gain for farmers, forestry, mining companies, energy, etc. (2) The manufacturers that bought those resources turn them into products for sale, worth more than the net resources. They sell to make a profit. (3) The above companies employ people. They take a wage, and buy the products. (4) So much additional wealth is being generated, that a service sector emerges, offering intangibles for profit. None of this is linear. The natural resource harvesters are also using up manufactured resources, such as machinery and energy and food. It's not a simple line, but it works. You only need enough cash to facilitate liquidity. (A barter system doesn't need any cash, but it's not nearly as easy to do business in.) Cash isn't the limitation, inflation isn't necessary. So long as resources exist to exploit, wealth can continue to grow. It's helpful to remember that Bill Gates doesn't have 50 billion dollars in currency available to him. He has 50 billion dollars worth of investments. There is not enough currency in circulation for everyone to convert their wealth to currency. Wealth is not measured in terms of available money. |
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| Author: | Diamondeye [ Fri Jan 28, 2011 6:53 pm ] |
| Post subject: | |
What do you mean by small and isolated? Geogrpahically speaking, South Korea could be called "small and isolated". Without modern communications and transportation it truely would be. With modern transportation and communications, "isolation" is really just an inconvenience. |
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| Author: | Screeling [ Fri Jan 28, 2011 8:20 pm ] |
| Post subject: | |
He's struggling with the expectation of a continually growing economy in a world of scarce resources. The isolated island is a hypothetical situation where all the resources possible are known and already available. I'll be honest that I don't know how to properly answer this, but I think the answer somewhat revolves around the fact that determining wealth will be a constantly changing process as what is valuable evolves. I could be wrong though. |
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| Author: | Rorinthas [ Sat Jan 29, 2011 11:56 am ] |
| Post subject: | |
Not every business can be successful because not every business owner has what it takes. Doesn't matter the size of the model. If i'm an incompetent, stupid business owner that sells crappy products and treats his customers like poo the economic climate is irrelevant. |
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| Author: | Xequecal [ Sat Jan 29, 2011 12:10 pm ] |
| Post subject: | Re: Some economics questions I have |
I dunno, AOL did pretty well with that business model their first decade. Good advertising trumps everything. |
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| Author: | Rorinthas [ Sat Jan 29, 2011 12:19 pm ] |
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YEah there are colloquial examples we can pick fun at, but not every businessman is savvy enough to pull the wool over the eyes of the customers. The Lima area didn't grow that much by the time Aol alternatives started popping up, and It was only a matter of time before they were no longer profitable here. |
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