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Coffee Shop
Interesting read..
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<blockquote data-quote="1982vett" data-source="post: 586683" data-attributes="member: 7795"><p>Hmm, Newsweek.</p><p></p><p>Agree, interest article. Just two things the author choose to ignore. </p><p></p><p><em>"That's a big mistake," says Dale Jorgenson, an economics professor at Harvard.</em></p><p><em></em></p><p><em>There's a key distinction here: <strong>While the money in your pocket is unlikely to just vanish into thin air</strong>, the money you could have had, if only you'd sold your house or drained your stock-heavy mutual funds a year ago, most certainly </em>can.</p><p></p><p>A weak dollar on the world market (exchange rate) lowers its buying power, just like inflation eats away at its buying power. So burying your cash in a coffee can under the china berry tree doesn't protect you having it vanish into thin air. When you dig it up you will likely find it won't by what it would have when you buried it. Value just vanished into thin air.</p><p></p><p><em>In the process, of course, you're losing wealth. But does that mean someone else must be gaining it? Does the world have some fixed amount of wealth that shifts between people, nations and institutions with the ebb and flow of the economy?</em></p><p><em></em></p><p><em><strong>Jorgenson says no</strong>—the amount of wealth in the world "simply decreases in a situation like this." And he cautions against assuming that your investment losses mean a gain for someone else—like wealthy stock speculators who try to make money by betting that the market will drop.</em></p><p></p><p>As Herfordsire has stated in some of his post. Their is two sides of a trade, a buyer and a seller. Now if the seller is selling something he doesn't own (short sale) he does gain in that he gets the money when he sells. If enough short sellers hit a stock, commodity, or market hard enough it can devalue the equity (good will, assets a company owns, merchandise) to a point that a loan is called or its bond rating is cut requiring a company to raise capital (current problem the banks are having) leading to its demise (bankruptcy). The short seller just made a bundle because he no longer has to repurchase the stock or security.</p><p></p><p>Otherwise it is a pretty good article with a lot of spot on concepts.</p></blockquote><p></p>
[QUOTE="1982vett, post: 586683, member: 7795"] Hmm, Newsweek. Agree, interest article. Just two things the author choose to ignore. [i]"That's a big mistake," says Dale Jorgenson, an economics professor at Harvard. There's a key distinction here: [b]While the money in your pocket is unlikely to just vanish into thin air[/b], the money you could have had, if only you'd sold your house or drained your stock-heavy mutual funds a year ago, most certainly [/i]can. A weak dollar on the world market (exchange rate) lowers its buying power, just like inflation eats away at its buying power. So burying your cash in a coffee can under the china berry tree doesn't protect you having it vanish into thin air. When you dig it up you will likely find it won't by what it would have when you buried it. Value just vanished into thin air. [i]In the process, of course, you're losing wealth. But does that mean someone else must be gaining it? Does the world have some fixed amount of wealth that shifts between people, nations and institutions with the ebb and flow of the economy? [b]Jorgenson says no[/b]—the amount of wealth in the world "simply decreases in a situation like this." And he cautions against assuming that your investment losses mean a gain for someone else—like wealthy stock speculators who try to make money by betting that the market will drop.[/i] As Herfordsire has stated in some of his post. Their is two sides of a trade, a buyer and a seller. Now if the seller is selling something he doesn't own (short sale) he does gain in that he gets the money when he sells. If enough short sellers hit a stock, commodity, or market hard enough it can devalue the equity (good will, assets a company owns, merchandise) to a point that a loan is called or its bond rating is cut requiring a company to raise capital (current problem the banks are having) leading to its demise (bankruptcy). The short seller just made a bundle because he no longer has to repurchase the stock or security. Otherwise it is a pretty good article with a lot of spot on concepts. [/QUOTE]
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