I think the key thing (arguing the nuance re: wealth is hugely boring and unimportant) is that codex was arguing about "what actually moves society forward." His hypothetical ditch-diggers, unless they BURN the money they earn, will end up moving things forward when they spend their money.
(unless we're talking about a hypothetical society consisting entirely of hypothetical ditch diggers. again, boring)
No, that's looking at the wrong place. Yes, the ditch diggers may make money and that may go on to generate wealth, but at the point where we're paying the ditch diggers, we're burning wealth. We could either have gotten something for that money, or nothing, and we chose nothing. There's opportunity cost there. Quite significant, in fact.
A lot of people make this mistake, including the government and even it seems to me many economists, always looking to the next transaction and failing to think about this one. But this one is the one that counts right now. The mere fact that the dollar wasn't "destroyed" doesn't mean that it did anything good, and it certainly could have.
There's a discussion to be had about the "velocity of money" but this isn't really the place for it. The point is that if an economy is hydrolocked and nobody is spending, "throwing away" money can benefit everyone if it unlocks things.
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I think the key thing (arguing the nuance re: wealth is hugely boring and unimportant) is that codex was arguing about "what actually moves society forward." His hypothetical ditch-diggers, unless they BURN the money they earn, will end up moving things forward when they spend their money.
(unless we're talking about a hypothetical society consisting entirely of hypothetical ditch diggers. again, boring)
No, that's looking at the wrong place. Yes, the ditch diggers may make money and that may go on to generate wealth, but at the point where we're paying the ditch diggers, we're burning wealth. We could either have gotten something for that money, or nothing, and we chose nothing. There's opportunity cost there. Quite significant, in fact.
A lot of people make this mistake, including the government and even it seems to me many economists, always looking to the next transaction and failing to think about this one. But this one is the one that counts right now. The mere fact that the dollar wasn't "destroyed" doesn't mean that it did anything good, and it certainly could have.
There's a discussion to be had about the "velocity of money" but this isn't really the place for it. The point is that if an economy is hydrolocked and nobody is spending, "throwing away" money can benefit everyone if it unlocks things.