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4. Making money with money?

But isn’t there another way that value is created, for instance in the financial world?

No, that is not correct. Making money is not the same as creating value.

 

Yes, it is true that people make money by trading stocks, shares, with investments and with everything else that is invented in the financial world. With these kind of activities money is earned, but no value is created. The money earned in the financial world always comes from somewhere else. A financial transaction is not connected to a value-creating process. In other words, value is not created through financial transactions, nothing is being produced. A financial transaction does not add anything to what already existed and is in fact only redistribution (or shifting back and forth) of money.

 

For the financial sector the same applies as for, for example, education, science, art: people can only make a living here because there are other people who are working in the 'real economy' and create value. It is the concrete economic production that provides the basis for the value of money.

 

John Hogervorst

April 2014


John  |  2014 04 11  |  Permalink  |  Share

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