Quote:
Originally Posted by BlackCrayon
So wealth is an infinite thing? I somehow doubt it would be possibly for ever person on the planet to possess 10 million dollars each. At some point, it doesn't work. Your neighbor having a billion dollars doesn't make you poor but the success of facebook for example, made myspace poor. Consumer spending can change directions, can't it? People will sell stocks from one company and invest in another. Wealth is not being created there, just re-directed, isn't it?
|
I did not say that wealth is infinite. Please re-read my post. The POTENTIAL wealth that can be created is infinite, and every time that a new product, or service, is created, or improved, new value, i.e. new wealth, is created.
The success of facebook did not "make myspace poor". First of all understand that all companies are composed of people, they do not create themselves. How much money was earned by the creators, and the employees, of myspace? That money didn't disappear when it was no longer profitable. It may NO LONGER be generating revenue, but that does not discount the wealth that it created before a better product came along.
As for the transfer of your investment holdings from one stock to another, you're right, that is not creating wealth. I never said that every activity involving the movement of funds does that. HOWEVER, the reason why you decide to buy that first stock is that you believe that the company you are investing in will be able to successfully use that money to create more and better, products and services, and therefore create more wealth, which you will be able to share in, since you helped get them the capital they needed to do it. That you decide to later sell that stock and buy another is simply a transfer of your capital for the same original reason.
I have poured all kinds of money into various projects over the years, in essence, I "bought stock" in them. Some failed completely, and I lost everything I had put into them. Since they failed to come up with a product or service that the market (i.e. free consumers/clients), did not place a high enough value on, no new value was created, therefore no new wealth was created. The projects which did create value in the market, created wealth for me. Some of them are no longer creating wealth, but that doesn't mean I don't have the money, (or the objects and services I traded the money for), that I earned from that project.
.
.