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"You cannot multiply wealth by dividing it."

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This is a spin-off from gsprofval's post: 5 Truths You CANNOT Disagaree With

in which 'truth' #4 is:

You cannot multiply wealth by dividing it.

If you have $100 then it makes no difference whether you keep it in a single account, or if instead you divide it, so you have $50 in one account and $50 in a second account.

If we now allow time to pass, and the interest rates on the accounts varies depending on how much is in the account, (for example, if you earn 5% on balances over $80, but only 2% on balances under $80), then it will make a difference.  However, as long as the interest rate is positive (and above the rate of inflation), your wealth will still be multiplying, even if you have divided it.

A better example than dividing it between different bank accounts in the same bank is moving half to a different bank, or putting half into the stock market.   If you do this correctly, you can get a higher return for the same level of risk (or a similar return, but for a lower level of risk).  Dividing wealth is often the sensible prudent thing to do.

On a different level, the same thing happens in families.   You could give all the wealth to the person you think it best at investing, but in the long run using that strategy it only takes one mistake and the entire dynasty's wealth is squandered.  A safer route is to divide the wealth among different family members, letting each increase the part of the pool they are responsible for, as best they can.  Some will fail, and some will do fantastically; and if you don't have a family full of fools, when it comes to divide things out among the next generation, the total wealth of the dynasty will have increased.

We can take this reasoning a step further.  It doesn't make sense, on a national level, to leave 80% of the country's wealth in the hands of only 20% of the population.  You'll get a better rate of return by spreading things out sufficiently for most people to stop living hand-to-mouth, buying things that are cheap rather than things that are efficient.

NOTE 1:

A $10 pair of shoes that lasts 1 year is cheaper than a $20 pair of shoes that last 5 years, but the latter is a more efficient use of money.

NOTE 2:

I made up the 20%:80% figure, because I can't remember the correct numbers off hand.

by on Feb. 8, 2013 at 3:33 PM
Replies (11-20):
Carpy
by Platinum Member on Feb. 9, 2013 at 6:02 AM
2 moms liked this

Here is ths snippet in context.


“Friend, you cannot legislate the poor into freedom by legislating the wealthy out of freedom. And what one person receives without working for, another person must work for without receiving. The government can’t give to anybody anything that the government does not first take from somebody. And when half of the people get the idea they don’t have to work because the other half’s going to take care of them, and when the other half get the idea it does no good to work because somebody’s going to get what I work for. That, dear friend, is about the end of any nation.  You cannot multiply wealth by dividing it.”


pvtjokerus
by Gold Member on Feb. 9, 2013 at 7:17 AM

 I completely disagree with this.  Taxes have been climbing higher and higher for the middle class and small business and these people are hunkering down and not spending their monies like before.  Look at the holiday sales.  They were down.  Look at economic growth now.  It is down.


Quoting autodidact:

Expanding a business and hiring more people is a tax write off. No business owner uses an after tax write off to expand a business, but uses it to buy a boat, second house, send the kids to college, play in the stock market, or buy real estate, that inflates prices for everyone else. But when taxes were high businesses invested in themselves and used their money productively in the economy, hiring more people. Investing in their business increased the worth of that business when sold at a low capital gains rate.

http://www.thomhartmann.com/users/dan4liberty/blog/2012/08/californias-golden-age-high-taxes-and-greatest-growth


 

Carpy
by Platinum Member on Feb. 9, 2013 at 7:26 AM

Tax write offs have limited value.  The cost far exceeds the deduction.

Quoting pvtjokerus:

 I completely disagree with this.  Taxes have been climbing higher and higher for the middle class and small business and these people are hunkering down and not spending their monies like before.  Look at the holiday sales.  They were down.  Look at economic growth now.  It is down.


Quoting autodidact:

Expanding a business and hiring more people is a tax write off. No business owner uses an after tax write off to expand a business, but uses it to buy a boat, second house, send the kids to college, play in the stock market, or buy real estate, that inflates prices for everyone else. But when taxes were high businesses invested in themselves and used their money productively in the economy, hiring more people. Investing in their business increased the worth of that business when sold at a low capital gains rate.

http://www.thomhartmann.com/users/dan4liberty/blog/2012/08/californias-golden-age-high-taxes-and-greatest-growth




pvtjokerus
by Gold Member on Feb. 9, 2013 at 7:34 AM

 True.


Quoting Carpy:

Tax write offs have limited value.  The cost far exceeds the deduction.

Quoting pvtjokerus:

 I completely disagree with this.  Taxes have been climbing higher and higher for the middle class and small business and these people are hunkering down and not spending their monies like before.  Look at the holiday sales.  They were down.  Look at economic growth now.  It is down.

 

Quoting autodidact:

Expanding a business and hiring more people is a tax write off. No business owner uses an after tax write off to expand a business, but uses it to buy a boat, second house, send the kids to college, play in the stock market, or buy real estate, that inflates prices for everyone else. But when taxes were high businesses invested in themselves and used their money productively in the economy, hiring more people. Investing in their business increased the worth of that business when sold at a low capital gains rate.

http://www.thomhartmann.com/users/dan4liberty/blog/2012/08/californias-golden-age-high-taxes-and-greatest-growth

 

 



 

finnbar
by on Feb. 9, 2013 at 7:53 AM
2 moms liked this


the problem with your position is, stealing is alway wrong and does not build up a society.

just examine the OTHER countries who have tried this "wealth distribution" route, then do us a favor and MOVE TO ONE OF THEM

Quoting Clairwil:

This is a spin-off from gsprofval's post: 5 Truths You CANNOT Disagaree With

in which 'truth' #4 is:

You cannot multiply wealth by dividing it.

If you have $100 then it makes no difference whether you keep it in a single account, or if instead you divide it, so you have $50 in one account and $50 in a second account.

If we now allow time to pass, and the interest rates on the accounts varies depending on how much is in the account, (for example, if you earn 5% on balances over $80, but only 2% on balances under $80), then it will make a difference.  However, as long as the interest rate is positive (and above the rate of inflation), your wealth will still be multiplying, even if you have divided it.

A better example than dividing it between different bank accounts in the same bank is moving half to a different bank, or putting half into the stock market.   If you do this correctly, you can get a higher return for the same level of risk (or a similar return, but for a lower level of risk).  Dividing wealth is often the sensible prudent thing to do.

On a different level, the same thing happens in families.   You could give all the wealth to the person you think it best at investing, but in the long run using that strategy it only takes one mistake and the entire dynasty's wealth is squandered.  A safer route is to divide the wealth among different family members, letting each increase the part of the pool they are responsible for, as best they can.  Some will fail, and some will do fantastically; and if you don't have a family full of fools, when it comes to divide things out among the next generation, the total wealth of the dynasty will have increased.

We can take this reasoning a step further.  It doesn't make sense, on a national level, to leave 80% of the country's wealth in the hands of only 20% of the population.  You'll get a better rate of return by spreading things out sufficiently for most people to stop living hand-to-mouth, buying things that are cheap rather than things that are efficient.

NOTE 1:

A $10 pair of shoes that lasts 1 year is cheaper than a $20 pair of shoes that last 5 years, but the latter is a more efficient use of money.

NOTE 2:

I made up the 20%:80% figure, because I can't remember the correct numbers off hand.



Carpy
by Platinum Member on Feb. 9, 2013 at 8:06 AM

She already lives in one of them.

Quoting finnbar:


the problem with your position is, stealing is alway wrong and does not build up a society.

just examine the OTHER countries who have tried this "wealth distribution" route, then do us a favor and MOVE TO ONE OF THEM

Quoting Clairwil:

This is a spin-off from gsprofval's post: 5 Truths You CANNOT Disagaree With

in which 'truth' #4 is:

You cannot multiply wealth by dividing it.

If you have $100 then it makes no difference whether you keep it in a single account, or if instead you divide it, so you have $50 in one account and $50 in a second account.

If we now allow time to pass, and the interest rates on the accounts varies depending on how much is in the account, (for example, if you earn 5% on balances over $80, but only 2% on balances under $80), then it will make a difference.  However, as long as the interest rate is positive (and above the rate of inflation), your wealth will still be multiplying, even if you have divided it.

A better example than dividing it between different bank accounts in the same bank is moving half to a different bank, or putting half into the stock market.   If you do this correctly, you can get a higher return for the same level of risk (or a similar return, but for a lower level of risk).  Dividing wealth is often the sensible prudent thing to do.

On a different level, the same thing happens in families.   You could give all the wealth to the person you think it best at investing, but in the long run using that strategy it only takes one mistake and the entire dynasty's wealth is squandered.  A safer route is to divide the wealth among different family members, letting each increase the part of the pool they are responsible for, as best they can.  Some will fail, and some will do fantastically; and if you don't have a family full of fools, when it comes to divide things out among the next generation, the total wealth of the dynasty will have increased.

We can take this reasoning a step further.  It doesn't make sense, on a national level, to leave 80% of the country's wealth in the hands of only 20% of the population.  You'll get a better rate of return by spreading things out sufficiently for most people to stop living hand-to-mouth, buying things that are cheap rather than things that are efficient.

NOTE 1:

A $10 pair of shoes that lasts 1 year is cheaper than a $20 pair of shoes that last 5 years, but the latter is a more efficient use of money.

NOTE 2:

I made up the 20%:80% figure, because I can't remember the correct numbers off hand.




finnbar
by on Feb. 9, 2013 at 8:16 AM


oh really? which one?

why is she harping on the subject if she already has it?

Quoting Carpy:

She already lives in one of them.

Quoting finnbar:


the problem with your position is, stealing is alway wrong and does not build up a society.

just examine the OTHER countries who have tried this "wealth distribution" route, then do us a favor and MOVE TO ONE OF THEM

Quoting Clairwil:

This is a spin-off from gsprofval's post: 5 Truths You CANNOT Disagaree With

in which 'truth' #4 is:

You cannot multiply wealth by dividing it.

If you have $100 then it makes no difference whether you keep it in a single account, or if instead you divide it, so you have $50 in one account and $50 in a second account.

If we now allow time to pass, and the interest rates on the accounts varies depending on how much is in the account, (for example, if you earn 5% on balances over $80, but only 2% on balances under $80), then it will make a difference.  However, as long as the interest rate is positive (and above the rate of inflation), your wealth will still be multiplying, even if you have divided it.

A better example than dividing it between different bank accounts in the same bank is moving half to a different bank, or putting half into the stock market.   If you do this correctly, you can get a higher return for the same level of risk (or a similar return, but for a lower level of risk).  Dividing wealth is often the sensible prudent thing to do.

On a different level, the same thing happens in families.   You could give all the wealth to the person you think it best at investing, but in the long run using that strategy it only takes one mistake and the entire dynasty's wealth is squandered.  A safer route is to divide the wealth among different family members, letting each increase the part of the pool they are responsible for, as best they can.  Some will fail, and some will do fantastically; and if you don't have a family full of fools, when it comes to divide things out among the next generation, the total wealth of the dynasty will have increased.

We can take this reasoning a step further.  It doesn't make sense, on a national level, to leave 80% of the country's wealth in the hands of only 20% of the population.  You'll get a better rate of return by spreading things out sufficiently for most people to stop living hand-to-mouth, buying things that are cheap rather than things that are efficient.

NOTE 1:

A $10 pair of shoes that lasts 1 year is cheaper than a $20 pair of shoes that last 5 years, but the latter is a more efficient use of money.

NOTE 2:

I made up the 20%:80% figure, because I can't remember the correct numbers off hand.






Carpy
by Platinum Member on Feb. 9, 2013 at 8:18 AM

Europe.  British, I think.

Quoting finnbar:


oh really? which one?

why is she harping on the subject if she already has it?

Quoting Carpy:

She already lives in one of them.

Quoting finnbar:


the problem with your position is, stealing is alway wrong and does not build up a society.

just examine the OTHER countries who have tried this "wealth distribution" route, then do us a favor and MOVE TO ONE OF THEM

Quoting Clairwil:

This is a spin-off from gsprofval's post: 5 Truths You CANNOT Disagaree With

in which 'truth' #4 is:

You cannot multiply wealth by dividing it.

If you have $100 then it makes no difference whether you keep it in a single account, or if instead you divide it, so you have $50 in one account and $50 in a second account.

If we now allow time to pass, and the interest rates on the accounts varies depending on how much is in the account, (for example, if you earn 5% on balances over $80, but only 2% on balances under $80), then it will make a difference.  However, as long as the interest rate is positive (and above the rate of inflation), your wealth will still be multiplying, even if you have divided it.

A better example than dividing it between different bank accounts in the same bank is moving half to a different bank, or putting half into the stock market.   If you do this correctly, you can get a higher return for the same level of risk (or a similar return, but for a lower level of risk).  Dividing wealth is often the sensible prudent thing to do.

On a different level, the same thing happens in families.   You could give all the wealth to the person you think it best at investing, but in the long run using that strategy it only takes one mistake and the entire dynasty's wealth is squandered.  A safer route is to divide the wealth among different family members, letting each increase the part of the pool they are responsible for, as best they can.  Some will fail, and some will do fantastically; and if you don't have a family full of fools, when it comes to divide things out among the next generation, the total wealth of the dynasty will have increased.

We can take this reasoning a step further.  It doesn't make sense, on a national level, to leave 80% of the country's wealth in the hands of only 20% of the population.  You'll get a better rate of return by spreading things out sufficiently for most people to stop living hand-to-mouth, buying things that are cheap rather than things that are efficient.

NOTE 1:

A $10 pair of shoes that lasts 1 year is cheaper than a $20 pair of shoes that last 5 years, but the latter is a more efficient use of money.

NOTE 2:

I made up the 20%:80% figure, because I can't remember the correct numbers off hand.







mommom2000
by Bronze Member on Feb. 9, 2013 at 9:18 AM
3 moms liked this

The facts are that this country does have a problem with the redistribution of wealth, and the rich are kicking everyone's ass in that war. It's not stealing to try to revive the middle class, policies can be changed that helps everyone in the economy, not just the top 2%.  It's policies since Reagan and the 80's that have allowed the rich to sky rocket while the middle class to decline. Since 1980 the top 1% have went from having 9% of all the wealth to 20% of all the wealth. The bottom 50% have 1% of the wealth..  When the top 1% keep increasing their share of income,  everyone else loses purchasing power.   In 1950 manufacturing use to account for 29% of GDP and financial services accounted for 11%. Now manufacturing is less then 12%, while finance is 20% higher then manufacturing, health, wholesale and retail combined. The richest 2% own 51% of the wealth. 691 people in the world now hold 51% of the worlds assets. With these staggering numbers policies should be helping the middle class, not the top, they don't need it.  With this economic model they are making out like bandits. Trickle down economics has been a huge success for the wealthy, and a failure for everyone else, yet the conservatives keep buying and selling this myth.  The numbers and facts don't lie, this theory has hurt 90% of the people in this economy.

JakeandEmmasMom
by Gold Member on Feb. 9, 2013 at 10:15 AM

 

Quoting Clairwil:

Quoting DSamuels:

Quoting Clairwil:

It doesn't make sense, on a national level, to leave 80% of the country's wealth in the hands of only 20% of the population.  You'll get a better rate of return by spreading things out sufficiently for most people to stop living hand-to-mouth, buying things that are cheap rather than things that are efficient.

How do you think that should be changed?

Don't abolish inheritance tax.  The lower the inheritance tax, the greater the tendency for the wealth of a nation to concentrate in fewer and fewer hands, over several generations.

 

 What is an acceptable inheritance tax in your view?  I can't imagine that you are opposed to generational wealth.

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