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How I hate people like this. "Building assets and letting them work for you". For this you can read: "be the footsoldier for the banks who have a monopoly on money creation. Ask the bank to create money for you then use this to join the land monopolists. Then let those stupid little people who are actually creating wealth rent it back from you. This way you get a stream of their labour." For assets read "property".

People should be aiming to keep most of the wealth they create. What makes the world shit, and what we cannot all do, is live off the backs of others.

If he knows people who are billionaires they go there by not passing on the wealth created by others. Nobody adds a billion of wealth creation, not even Gates.

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>Nobody adds a billion of wealth creation

How about JK Rowling. Must be close.

Yes, but not beyond the value to the eventual purchasers ...

That isn't particularly relevant. Value to purchasers is not constant. With a higher price, you generally get fewer purchasers, and with a lower price, more. I could argue that the maximum net societal value for any already-written book is generated by having a price of zero. The question of price then becomes one of incentive: what price generates sufficient profit to motivate the creation of cultural products? A price that generates billions for the author is probably too high.

Debt is a lever, in itself it's neither good nor bad.

If I have a $10m net worth, I might want to lend someone $1m for a year on which they will pay me 5% interest per year. If that person can turn that million into one and a half million, what's the problem?

The problem is when people are seeing all their labour disappear as rent / mortgage to people who are adding no value. This is happening way too much.

Not when it's only issued by a monopoly.

Who says only banks can make loans?

Only banks can create money. Bank of England official blog:

http://bankunderground.co.uk/2015/06/30/banks-are-not-interm...

Debt is not a lever it's a stick to beat the landless with in order to extract labour as tribute to the elite.

That's the thing, they don't loan the money, they create it, banks haven't functioned the way they're popularly imagined to function for centuries. And it's so sad that this false image is the moral basis for banks going after borrowers assets.

The bank doesn't lend you someone else's money, it creates the money(no effort) and you have to work and put up real collateral to pay it back.

By G-d we should all be working to expose and undo this madness.

> it creates the money(no effort)

Err, there most certainly is an effort assessing credit risk and dealing with the fallout when someone defaults.

What exactly is the risk to the Bank in lending out money they just created?

They didn't magic it out of thin air. It's a liability to them. If the loan is paid into another bank they then have to transfer central bank deposits to that other bank. If the loan is never paid back then they've lost money.

Is it genuinely not obvious to you than bank deposits aren't something that banks can create and destroy on a whim?

That's actually not quite correct. The loan itself is an asset to the bank. When you sign the promissory note, they then give you a balance at the bank in the amount of the principal of the note, THAT is the liability.

The loan is the asset because that is money coming into the bank. Your deposits are liabilities because that is money you could withdraw from the bank.

So it is both a liability and an asset. They don't create it out of thin air, they create it out of ink and paper. It's a hack of the double-entry bookkeeping system.

I recommend Paul Grignon's Money As Debt: https://www.youtube.com/watch?v=jqvKjsIxT_8

The balance in the bank, which is colloquially called a "loan", is a liability to the bank, yes.

And do you agree there is a "risk to the Bank in lending out money they just created" or is that still up for discussion?

No, the balance in the bank is not the loan. You need some understanding of double-entry bookkeeping to understand fractional reserve banking. The loan(promissory note), is on the banks balance sheet as an asset. Your balance which you can withdraw as cash is on the banks balance sheet as a liability.

What is the bank risking when it creates the money and uses the anachronistically titled "loan" contract to distribute it? • They risk only being able to extract so much labor. • They risk taking on collateral which is a REAL asset that someone worked for, like their home if they're unable to generate enough of the assets the banks just write into existence. • They risk passing the buck up the ladder ultimately to the lender of last result if they're "too big to fail" which just creates more money to deal with the problem.

Banks are not lending out other people's money, everyone tacitly knows this, if they were how come when you go to the bank they never say, sorry its out on loan at the moment? This was the case at historically and banks are still riding on the fact that people haven't gotten wise to the way it's worked for centuries now.

There is no lending taking place when bank loans are made.

Hmm ... are we still on the same page? This is where the discussion started: https://news.ycombinator.com/item?id=10995433

You seemed to be claiming that a bank incurs no cost ("no effort") to issue a loan. Are you sticking to that?

Yes, we're still on the same page. The Banking system is rapacious and it should be done away with. Its capital allocative functions have been subverted by extraction. It's an emergent system so that isn't to imply that the people who work at banks are rapacious. That would be the fallacy of division: https://en.wikipedia.org/wiki/Fallacy_of_division

It is that bad.

Anyone can make loans. However, banks borrow newly created money from the ECB or FED at an extremely low rate. If you borrow money at 2% from a bank then they are getting it at 0.1%. The spread - that 1.9% - is their profit.

> The spread - that 1.9% - is their profit.

No it's not. There are plenty of costs involved in issuing loans that will eat into that 1.9%.

Well, obviously there are running costs / default risks / etc. I was just pointing out how a small bank works in its simplest form.

I'm with you on this brother. Keep telling people. Think back to 2006, you hardly saw anyone criticise the system in this way, now I see it all the time. It's coming.

The problem is ethics, you just made somebody slave for a year. Now if you're happy with that, that's ok.

> Nobody adds a billion of wealth creation, not even Gates.

A billion dollars is not very much. There are ~150M Americans working in the US, if something helps every one of them make $7, then over a billion dollars has been created.

Microsoft has enabled practically every person in a developed nation to do their job more efficiently. This is worth far, far more than a billion dollars.

MS is worth a lot and yes they have helped productivity. Did Gates do that or did he do it with the help of many people before him inventing all sorts and many workers adding software. Were the workers compensated sufficiently for the value they added? Did MS use a pseudo monopoly using the legal system to capture more value than they actually added?

Gates did a lot but he stood on the shoulders of giants, seemed to have some "sharp" business practices enabled by our monopoly loving nation states and a lot of employees did the heavy lifting.

I'm not criticising Gates, I don't mean to pick on him. If we had cheaper land I think the balance would shift to workers being less over a barrel and more able to negotiate higher wages to capture a greater share of their added value.

Then I think what you're saying is lots of people create millions or billions of dollars worth of value, but few of them capture it. That's fair. I think one of the lessons of this book (at least subtextually) would be to aim to caputure the value you create.

Managing people is a critical component to a successful business. While he did get his hands dirty a lot during the early years, you can't take away from him credit just because he commanded others to do the labor.

I understand and appreciate you sentiment. You're right, it wasn't entirely due to him, it was a collaboration between hundreds of people. But, if he left during the very early years, it's an almost certainty that MS would not have achieved its success and influence.

I still think he's very far from doing it alone, he's using tech that govt helped build, he's using infra also that is common. They should tax these guys more. Someone would have done "computers", Gates or someone else. Taxing them more wouldn't put them off.

I agree with not agreeing with his debt-based asset-building approach.

But you can still follow the same path in a tech way, such as selling your own product online. As you work on it, if it's producing income, that can begin to be an asset for you.

Sure, that I have no problem with. Go forth and create wealth. Do not take land monopoly in a flawed system and force others to give you their labour.

And if that land was purchased with wealth that was created, what's the problem?

Most is purchased with debt - this is what sets the price. Also they are not making new land. Why should people have the right to charge people to live on a part of the earth in perpetuity? The state builds infra around it then the land owner charges a fortune for people to have the right to exist.

Land is a special case and should be treated as such. Land value tax would address this by capturing most of the added value from land for the common wealth rather than land monopolists.

>Land value tax.

Property taxes already exist. The people renting the property already pay it. If that tax goes up, then so do the rents.

Agreed.

What if the value I create is a house that other people can live in? Am I allowed to collect payments from them, or was I supposed to gift it to them?

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