Musings on money...

Last night, I was sittin' around and philosophizin', as is my habit, and I came up with an interesting question-

The funny thing about money is that the more of it you have, the easier it is to get. Someone with a million dollars could turn it into 2 million in a year or so with a good business idea, smart investments (maybe not in this economy, but 4 or 5 years ago, definitely), etc...but you could go to your grave trying to figure out how to turn one penny into two.

So the question I came up with is: How much money would someone need so that the process of trying to make more money costs more than you stand to make? At what point do you have so much money that you can't help but lose it, no matter what you do?

This is the kind of craziness that keeps me up all hours

When you have so much money that the sheer weight and mass of it all implodes the earth. Then you've reached that goal, I think.

Ask the US goverment

Fractured wrote:How much money would someone need so that the process of trying to make more money costs more than you stand to make? At what point do you have so much money that you can't help but lose it, no matter what you do?

I don't understand this question. What you're basically asking is when does risk always become a negative equation. There's no answer. Every transaction has risk associated with it, and that's why the risk management industry exists.

The way most capitalist markets work, there are always borrowers -- which mean that lenders can always turn a profit. So while all of your capital may not be generating revenue, you don't reach 'critical mass' where you lose money no matter what you do.

Unless you're a supply-side economist.

*snicker*

It is impossible to lose money you choose to invest (in lender-borrowers/stock/whatever) unless outside sources (global economies evaporating, stock markets crashing, that sort of thing) conspire against you.

The only set up where you'd actually lose money (on average) is when there is nowhere to invest it (risk >> potential reward) and the banks offer rates below inflation.

Anyway if you get so much money that any venture results in you losing it then at one point you would lose enough money that you fall back into the category of being able to make money on your ventures again.

BBQLord wrote:The only set up where you'd actually lose money (on average) is when there is nowhere to invest it (risk >> potential reward) and the banks offer rates below inflation.

yes, but this isn't an investment.

it's a condition that would apply to everyone equally in the market -- therefore the value of the currency may fall, but your worth in comparison to all other players is unchanged; i.e. you have not lost money. the scale of the entire system has simply changed.

So while all of your capital may not be generating revenue, you don't reach 'critical mass' where you lose money no matter what you do.

If you (hypothetically) had 51% of the world's wealth for one instant, wouldn't that qualify as critical mass? Any action towards obtaining the other 49% would decrease the amount of wealth you have, while inaction has the same result due to the expense of living (one of my favorite titles ever- Death: The High Cost of Living. Go back to comics, Neil! )


I'm also wondering when Diminishing Returns set in- at what point does looking for new avenues to generate wealth and trying to strengthen current sources (by increasing market share, etc.) cost more money than you stand to make from those new avenues/improved sources?

And I'm just talkin' out of my ass here, I should point out

Fractured wrote:If you (hypothetically) had 51% of the world's wealth for one instant, wouldn't that qualify as critical mass? Any action towards obtaining the other 49% would decrease the amount of wealth you have, while inaction has the same result due to the expense of living (one of my favorite titles ever- Death: The High Cost of Living. Go back to comics, Neil! )

This would all depend on whether or not the currency was backed by a commodity.

If it were, you would actually reach a 'critical mass' of being able to dictate the market, which (by default) increases the worth of your share.

Hmm...it seems to me that the implication of what you're saying means that It Is Possible to Win at the Game of Money.

that sucks : )

Of course it is. How else do you think the truly wealthy maintain that wealth?

Hell, J.P. Morgan and the DuPonts tried to overthrow the fucking President and install a fascist government.

Yeah, they maybe should have made sure the guy that was the lynchpin of their plan wasn't an FDR supporter.

Quite the foolish investment

Hell, J.P. Morgan and the DuPonts tried to overthrow the fucking President and install a fascist government.

I've heard stuff about this...got any good (text; can't watch video at work) links?

From Cracked.com.

(edit: granted, not necessarily the best source, as it is a humor website, but it can point you in the right direction for better research.)

yes, this gives me some stuff to further my inquiries, thanks : D

West wrote:it's a condition that would apply to everyone equally in the market -- therefore the value of the currency may fall, but your worth in comparison to all other players is unchanged; i.e. you have not lost money. the scale of the entire system has simply changed.

Not so. Mr. Rich Bastard makes money by investing it while most people make money by working. So if RB can't make money by investing (let's just say it's exactly 0% profit everywhere) others can still make more by working. Inflation, at least in my country, is linked to the cost of living so the working class would be mostly compensated while there is no such thing to compensate Mr. Rich Bastard's zero investment income.

Relatively, that would mean Mr. Rich Bastard is poorer.

Fractured wrote:Hmm...it seems to me that the implication of what you're saying means that It Is Possible to Win at the Game of Money. that sucks : )

Fret not, Fractured, at least in the utopia that is the World of Darkness the filthy rich get robbed, murdered, ghouled, etc.

BBQLord wrote:

West wrote:it's a condition that would apply to everyone equally in the market -- therefore the value of the currency may fall, but your worth in comparison to all other players is unchanged; i.e. you have not lost money. the scale of the entire system has simply changed.

Not so. Mr. Rich Bastard makes money by investing it while most people make money by working. So if RB can't make money by investing (let's just say it's exactly 0% profit everywhere) others can still make more by working. Inflation, at least in my country, is linked to the cost of living so the working class would be mostly compensated while there is no such thing to compensate Mr. Rich Bastard's zero investment income.

You're making several large assumptions here:

1) Rich bastard cannot work.
2) Everyone who is working continues to work.
3) Everyone who is working is compensated for inflation.

The fact is that RB's currency is still worth exactly what Other's are. He has not lost value, which was the basis of Fractured's question and my response.

Certainly, you can tailor a scenario which might support your premise, but only because you are not applying conditions equally to everyone participating. Otherwise, this stands true:

West wrote:it's a condition that would apply to everyone equally in the market -- therefore the value of the currency may fall, but your worth in comparison to all other players is unchanged; i.e. you have not lost money. the scale of the entire system has simply changed.

RB's salary is but a fraction of his income.

The second assumption is not unusual when discussing economic stuff (isn't it always ceteris paribus unless explicitly stated otherwise)?

The third assumption, I immediately pointed out, applies at least to my country. I do not know how other countries handle it.


I think my main point can be summarized thus:
1) RBs derive most income from investments.
2) Most poor slobs derive their income from work.
3a) if no additional profitable investments can be made this means the absolute investment income is fixed.
3b) Investments are not (or insufficiently) inflation compensated this means the relative investment income is dropping.
4) if wages/salaries are compensated for inflation this means both their absolute income increases while their relative (in time) income remains the same.
5) #4 means that RBs are now, relatively speaking, poorer than before (they lost relative value, workers remained the same).

All of that may be true; however -

Your answer to Fractured's original question was faulty, as I pointed out.

Redefining the original question to suit your answer isn't a valid argument.

Unless you're Microsoft.

My original answer to the original question was:

It is impossible to lose money you choose to invest (in lender-borrowers/stock/whatever) unless outside sources (global economies evaporating, stock markets crashing, that sort of thing) conspire against you.

After saying it was impossible I started concocting insane scenarios geared to RBs losing money (which I interpreted as value, not as money per se). Do you just disagree with my far-fetched hypothetical situations or do you also disagree with the above mentioned answer?

Also, Microsoft = non-WoD Pentex.

Fret not, Fractured, at least in the utopia that is the World of Darkness the filthy rich get robbed, murdered, ghouled, etc.

Thanks for the reminder, BBQ : )

You then qualified it with this:

The only set up where you'd actually lose money (on average) is when there is nowhere to invest it (risk >> potential reward) and the banks offer rates below inflation.

Which I demonstrated as untrue... so then you kept adding conditions

The specific answer you gave, quoted here, is untrue.

Anyway.

That's all I've got, I enjoyed it, hope you didn't take offense.

Yeah, I'm both lazy and pretty careless with the way I express myself. Gotta keep myself sharp... Luckily I can outsource such activities to other forumites. There are few better ways than having others point out flaws. Often more appealing than looking for them yourself. No hard feelings, good times were had.

@Fractured: It comforts me to know that this picture doesn't hold true for the WoD. http://www.sloshspot.com/photos/blog/full/photo_1230744044.png
In the WoD everyone participates in the latter part.