I think much of this obscene wealth is kind of “fake.” Like, if I buy a house, and I do nothing to that house, no improvements, nothing, then turn around and sell that house for double what I bought it for, was any new wealth created? I now have more money, and the person I sold the house to now has an asset that is worth double what it once was, but where did all this new wealth come from? The house didn’t change at all.
I mean, let’s say I bought the house for $100,000, I wait a few years and sell it for $300,000, I just made $200,000. Then the person I sold it to sells it after a few more years for $500,000, making him $200,000. Then the person he sold it to sells after a few more years for $700,000, and he makes $200,000. That’s $600,000 thousand dollars generated from one asset. Isn’t that a little odd? It seems like at some point someone is going to buy the house but they’re not going to be able to sell it for more than they bought it for. I just don’t see how assets can just keep going up in value forever.
Two economists are walking in a forest when they come across a pile of shit.
The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit.
They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit.
Walking a little more, the first economist looks at the second and says, “You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can’t help but feel like we both just ate shit for nothing.”
“That’s not true”, responded the second economist. “We increased the GDP by $200!”
The house isn’t creating new wealth. The new wealth was created elsewhere in the system and used to pay for the house. The value of the house going up isn’t the same thing. Now if you use the increased value of the house to back a second mortgage, that’s when you’re creating wealth. But you’re doing it through the fractional reserve banking system, whose entire job is to create wealth by loaning out copies of money.
