Quote from: johnyj on March 26, 2013, 05:20:23 PM

I can only think of two occasions that you need credit money to invest:
1. you are in a war with another country, if you do not produce weapons fast enough, you will lose the war
2. you are extremely shortage on everything after a war that you need to reach a certain living standard quickly

Isn't this basically what life is?

Quote from: MoonShadow on March 25, 2013, 09:13:49 PM

Quote from: Puppet on March 25, 2013, 08:49:58 PM

Quote from: MoonShadow on March 25, 2013, 08:09:24 PM

It's not better, nor worse, for society at large. That's actually impossible. The "market cap" of an economy is simply a reflection of the total wealth of that economy. It doesn't matter so much who happens to possess that wealth, from an economic perspective.

Distribution of wealth actually matters very, very much.

Politcally and socially, sure. Economicly or mathmaticly, not so much.

Quote

But thats not the point Im making, as it isnt about wealth; its about availability of credit. You (usually) dont get significantly more or less wealthy if you invest your credit money for instance in the stock market. But what you do achieve is making credit (ie money) available for businesses and generally thats a good thing for the economy. If everyone would hide their fiat under their pillow you would have a problem. Thats why I say the small disincentive inherent to inflationary credit money is actually a good property for the economy at large.

You're missing the point. Credit availability is a problem for whom? I'm not trying to be a jerk, I'm trying to be a better economics professor than you apparently have been exposed to thus far. The classic method involves asking questions of the student, in order to lead them to a deeper understanding of the topic. Economics is more than mathmatics or statistics, it's people, so both the who and why does matter.

Moon I'm having trouble understanding your two statements in relation to each other. They seem to be contradictory. In your eagerness to teach, you may have been a bit unclear. The way I see it, economics is both social and mathematical science, and from that perspective, the distribution of wealth matters very much. I agree with you that the who and the why does matter.

Quote from: Technomage on March 25, 2013, 03:52:17 PM

Learn about time preference. It's one of the most important and relevant concepts in the Austrian theory. There is no such thing as money that just sits there forever. Saving money means having a low time preference for current consumption, which means delaying the consumption for future needs. For situations where the time preference for consumption has increased. Therefore saving, or "hoarding" as some idiots call it, is not putting money away for good. It's saving money for future consumption.

If you have so much money that you could indulge all of your present wants and needs and still have money left over, then effectively, wouldn't the remainder "just sit there forever?" Is it really worth entertaining the notion that the money will enter the economy in 100 years so it's still productive? What about 200 years? A billion years? It sounds ludicrous but if you had a certain quantity of money that you didn't need to spend, and it continued to appreciate just by your holding onto it, then wouldn't you just hold it, and if so, how is that productive?

Quote from: memvola on March 25, 2013, 01:48:55 PM

Quote from: Puppet on March 25, 2013, 01:02:47 PM

The actual purchasing power that the land you own represents isnt going up significantly every year unless you made an above average clever investment.

Nope, it does, on average, because there is economic development and there is population growth. I'm not a clever investor, I just buy up land whenever I think the area needs more development. It never fails.

That's fine for you, and it proves the point that by holding onto your asset you're reaping the gains of others' labors. People developing the land around yours is causing it to go up in value. Your owning the land hasn't contributed much or anything, but it's increased in value. Obviously everyone can't use the same strategy or no development would occur.

Quote from: Puppet on March 25, 2013, 11:12:40 AM

Think about it. lets say your currency appreciates by 10% per year and you can live a luxury life spending only 5% of your savings. Whats happening? You get richer every day by doing absolutely nothing.

Basically.