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Thread: Economics 101

  1. #21
    pathwise dependent FDG's Avatar
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    Right, it's 1 percent controls 33 percent of the wealth, which is roughly more than the cumulative 90th percentile. Well, I wouldn't say that 1 percent control 90 percent from this situation, though.
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  2. #22
    Senior Member Maabus1999's Avatar
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    Quote Originally Posted by FDG View Post
    Right, it's 1 percent controls 33 percent of the wealth, which is roughly more than the cumulative 90th percentile. Well, I wouldn't say that 1 percent control 90 percent from this situation, though.
    As I said I mistated it when I didn't mean total wealth but equivalent wealth between capita. It is fairly high (census data has it at 40% of total wealth). Basically ~40% is 1%, 30% in 9%, and 30% in 90% is how it breaks down +/-2% to each. That is much higher then it was 20 years ago and is unsustainable in a stable society.

  3. #23
    Dhampyr Economica's Avatar
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    Quote Originally Posted by untypable View Post
    The problem is Economica, I read alot of textbooks and I don't feel like they make sense in the real world. Any theortical knowledge that has no power in the real world has only ivory tower value.

    I have much more interest learning how economic laws work in real life and help me make millions.

    But thank you for the bnook reccomendation,
    Which textbooks have you read? Just curious.

  4. #24
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by untypable View Post
    ptgasby. people want everything, but people cannot buy everything. this is always true.

    But there are goods that people will always spend money on. Fopr instance:
    Well... they are more universal... that is, the demand for these items is strong (or inelastic, if you prefer). It's a "universal" demand - like food, etc.

    This is how some buysiness becomes powerful while other business stay small and weak.
    Ah! That's not, actually, how businesses become powerful. In any market, there is 'finite' demand at the price point that you and your competitors can produce at. It is the ability to produce at this price point and move to a lower price point that allows a company to survive. The best you can hope for by commanding demand, as you describe above, is to enter a new market. That simply gives you time to establish yourself without competition - without a lock on the market (patents, natural monopoly), competitors will enter and you'll be back to the "do better than competitors".

    For instance, there is a dude down the street that sells poorly made plastic dragons, and he is pratically living like a bum. Becuase no one likes to buy plastic dragons. This is how ruthless the market really is.
    Yup. That's the way it works, exactly.


    Quote Originally Posted by Maabus1999 View Post
    Again, feel free to check the link I posted (read the quote underneath 1,000 billionaries statement). I watched that documentary and it was amazing. Just the thought of millionaires feeling poorer then the average American due to the fact the people the usually work with/for/around are much richer then they are at times causing a bigger social shock then what most middle class Americans would feel being around their normal peers and bosses. Strangely insightful into a lot of things.
    I don't disagree with the overall sentiment, just the wealth distribution statistic. The US has lost a great deal of income mobility and has a poor income/wealth gap.

  5. #25
    Senior Member Lateralus's Avatar
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    (1)What drives economic growth of a country?
    What drives it is innovation, discovering ways to produce more efficiently.

    The labor of an assembly line worker in a Honda plant is worth than the labor of someone who makes clay pottery by hand in Bolivia because the result of that work has more economic value (automobiles are worth more than clay pottery). Economic growth could come from finding a way to produce clay pottery more efficiently, like inventing (or buying) a machine that would allow the laborer to produce pottery twice as quickly.

    (2)does increase of money supply means the increase of wealth of an economy?
    No. If you have a population of 10 people, 10 widgets, and $10 in the economy, each individual could spend $1 to buy 1 widget. If you doubled the money supply to $20, there would still be only 10 widgets. No wealth is created by doubling the money supply, only the illusion of wealth. This illusion creates an imaginary economic boom causing the widget manufacturer raise the price of widgets and to build more widgets than would otherwise be demanded. This boom is followed by a bust (recession) once everyone realizes the boom wasn't real. The widget manufacturer will end up with too many widgets in his inventory and he'll have to drop the price back down to $1 (though he'll probably ask the government for a bailout to cover his losses).

    A real economic boom would come from someone figuring out a way to produce widgets more cheaply, allowing people to either purchase more widgets or use the extra money on other products.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  6. #26
    Alexander the Terrible yenom's Avatar
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    Quote Originally Posted by Economica View Post
    Which textbooks have you read? Just curious.
    Economics: Principles, Problems, and ... - Google Book Search
    The fear of poverty turns people into slaves of money.

    "In this Caesar there are many Mariuses"~Sulla

    Conquer your inner demons first before you conquer the world.

  7. #27
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by Maabus1999 View Post
    I believe he is talking about the US. And I might have misstated it slightly but it is close to what I wrote. Basically less then 1% of the US population has more wealth then 90% of the rest of the US combined.

    Here is an article that just came out this week and was also on TV. Was a great show.

    Untold Wealth: The Rise of The Super Rich - CNBC.com

    The top 1% of the country having more wealth than the poorest 90% of the country is NOT the same as the top 1% controlling 90% of the wealth. The most recent estimate I have seen is the top 1% has 35-38% of the wealth in the United States.
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  8. #28
    Alexander the Terrible yenom's Avatar
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    I am betting that most people have better strategies to accumulate wealth than the work hard and save. Because I am sure alot of people here are not SJs.

    It really does not matter how hard you save or how frugal you are, because in the end, if you don't know how to gain money, yoyu are losing money everyday to the economy and in the end you are still going to be broke and depend on your job for income.
    The fear of poverty turns people into slaves of money.

    "In this Caesar there are many Mariuses"~Sulla

    Conquer your inner demons first before you conquer the world.

  9. #29
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by untypable View Post
    I am betting that most people have better strategies to accumulate wealth than the work hard and save. Because I am sure alot of people here are not SJs.
    Strategies are not successes The most direct route to having a reasonable amount of money (ie: top 10-20%) is to get a professional degree. But that requires certain levels of ability to start with, etc.

    It really does not matter how hard you save or how frugal you are, because in the end, if you don't know how to gain money, yoyu are losing money everyday to the economy and in the end you are still going to be broke and depend on your job for income.
    It depends on what you mean here... You consume your labor for goods and services - a bad trade if you wish to have more wealth (saved labor) in the future, but not a loss.

    There is an interesting view that results from the top few percent of earnings being covered in all sorts of news programs, etc. The catch is that when you only see those that are successful, you can't get an idea of how many failed. No one really knows. You can read tons of books on how to achieve it - and for the most part, work hard, work smart and work honestly summarize it - and yet you cannot know how many people tried and failed.

    My dad works as a management accountant, mostly with private firms. He said that an optimistic viewpoint would be that about 20% of family companies (ie: private) survive the long haul. My personal guess is that number is closer to 5%, with another 10% being sold for a discounted amount after it ran into trouble, and probably 20% being sold very close to par (ie: assets = liabilities).

    The worst part is that the majority of small businesses that don't fail (different than the family/private companies I am talking about up there) aren't economically viable... that is, the private owner has chosen to to keep the business alive even though he could make more money doing something else.


    That is, there is nothing wrong having a job You may not get ultra rich, but if you are frugal and save, you have a much higher chance of having money at the end of it.

  10. #30
    Alexander the Terrible yenom's Avatar
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    What do you think are their reasons for company failure , lack of understanding of the market?

    How hard you work had no relation to how much money you make. How much you make i think depends on how much the market pays you i think.

    And I don't want to be the top 10 -20%, but i want to know how the economic system works and how wealth can be accumulated.

    The reason for most business failure is that they do not know how to find customers. There are millions of business competing against each other, what can make your business stand out?

    It depends on what you mean here... You consume your labor for goods and services - a bad trade if you wish to have more wealth (saved labor) in the future, but not a loss.
    Well it depends on what you planned to do with the saved money. Most people plan to spend it on something later on, which is a way of losing it.
    It is a matter of losing it more quickly or slowly. Most people do not know how to accumulate money other than income ftrom the boss and bank savings interest.
    The fear of poverty turns people into slaves of money.

    "In this Caesar there are many Mariuses"~Sulla

    Conquer your inner demons first before you conquer the world.

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