Creating money

[Imran Siddiqui]

That profit, not money creation, Lancer.

And in your original example, there is no profit in there for you either.

[Lancer]

Imran, ahh, in the thread example. No, I didn't make any money myself. I'm saying that money was created during the process.

Profit and money creation can be the same thing though, can't it?

Else how does an economy expand?

[Imran Siddiqui]

No, I didn't make any money myself. I'm saying that money was created during the process.

Not at that moment. Years later when all the interest is collected by the party you sold the mortgage to outright, yeah.

Profit and money creation can be the same thing though, can't it?

Else how does an economy expand?

Simply because you make more and more profit, doesn't mean that money is being created. You are getting that profit from someone else, who is paying you for it. You don't necessarily have to be creating money because of it, and in land deals you really aren't creating money by your profit (the value of the land just rose).

[Lancer]

Then how does the economy expand? Through the goverment printing more money? No! Through the people creating more value, which is really the same thing as money, since it is convertable, right?

[Kidlicious]

Money was created with the mortgage. Selling the mortgage doesn't create any money. Is that what you guys figured?

[Lancer]

Sten would get a laugh outa this thread.

[Lancer]

The only thing I'm sure of at this point is that I'm going with the Szechyan chicken.

[Kidlicious]

When a loan is created the money supply is increased. There are now two assets, the loan and the money that was loaned. Selling the loan is just trading assets though.

[Imran Siddiqui]

Then how does the economy expand?

Four ways: Increase in either consumption, investment, government spending, and net exports. So yes, the government spending DOES expand the economy (and causes inflation).

Production of goods and services results in expansion (as do banks lending money). It puts more money in the hands of the workers of that company. However, profit, by itself, does not. You sold land, you didn't produce anything. No expansion came about. You simply bought a piece of land, weighted for it to increase in value, and then sold it at a price. However someone had to pay that higher price. Taken by itself, that transaction did nothing to create expansion.

Now what you do with that money afterwards MAY expand the economy.

However, expanding the economy has nothing to do with creating money. All it does is alter the value of the money.

[Imran Siddiqui]

Money was created with the mortgage. Selling the mortgage doesn't create any money. Is that what you guys figured?

Bingo... at least that is what me and Sava figured. Lancer doesn't think so.