Thursday, September 29, 2011

My financial hero *cough* villain

Now and again I find links to interviews with bigwigs in finance who talk about the financial crisis.  Sometimes they end up being reasonable and the bigwig in question talks about what they think the global economy is going to do and why they think that.  Sometimes they just talk about the inevitable collapse in a resigned fashion and sometimes the bigwig actually wants a depression because they are in a position to profit from it.  The thing that boggles me most about these interviews is the way in which the people being interviewed have no idea of the difference between acquiring money and creating value.  They seem to think that by telling people to invest in (insert random stock, bond or currency here) they are being philanthropists.

You can build a new product and market it and by doing so become rich.  In this way you are actually creating value because you are making something people need and receiving wealth in return - the lives of those who use your product are presumably enhanced.  On the other hand you have people who invest large sums of money betting that the market will collapse and cheer when it does and act as if they have done something great by making a lot of money.  In particular they seem to feel great about giving investing advice on TV because the people who listen to that advice can then make a profit from it.  How wonderful!  Of course the fact that this money comes directly out of the value of other people's investments isn't much acknowledged.

It is a truth that people simply don't understand what money is.  It is a measure of influence among people and it is a zero sum game.  If you make a lot of money then somebody else *had* to lose a lot.  If you look at how you made the money and notice that nobody benefited than you are certainly increasing your personal wealth but you are doing so simply by taking from others.  I can absolutely understand pride in earning a lot of money through creating things or offering services to people - in that case there is a real correlation between money and value.  Unfortunately much of the largest monetary acquisitions in the world today are simply taking money from others for no benefit to us all and becoming rich that way is something I put no value in whatsoever.

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