Money, Wealth, Risk, and Bitcoin, by Daniel Tenner of swombat
Joyce Park stashed this in Economics
Interesting take on (among other things) Bitcoin.
This is an excellent article that defines the differences between money and wealth, and uses Bitcoin to illustrate those differences.
The ending is particularly helpful:
If you want to avoid falling into some of the most devious traps that wrong-thinking about money can lead you into, keep the following principles in mind:
- Money is a medium of exchange for wealth, it is not a store of wealth.
- Money is transient and unreliable, and expecting it to display permanence will only lead to disappointment.
- Wealth is not an accumulation of money, but the ability to generate it when you need it.
- The fundamental building blocks of wealth are health, education and intelligence. Money is a side-effect of combining these building blocks with a wilful effort to create wealth.
- Any aggregation of lots of money is a risk. Turn it into net income generating assets as soon as possible to reduce that risk.
- Any aggregation of assets also is a risk! It can have maintenance costs, if they're not net income generating assets. Sometimes those costs outweigh the value of the assets in which case the assets are a net negative. Be careful what assets you invest in.
Yes, but the real question, are those just a side effect of the world's taxation bodies' per-occupation with income? I'd love to see the craziness when the re-distributionists start proposing wealth taxes.
There needs to be a clear understanding between the differences between income and wealth.
Wealth taxes would never get approved. Too many rich entities would lobby against them.