A dollar sitting has just the value of the paper like material its made of, but a dollar when used to purchase it has its economic value.
But doesn’t this logic only work if people are physically stashing benjies under their mattress? Because let’s say some fat cat keeps a large bank account balance. The bank doesn’t just take the fat cat’s money and put it in a drawer. That money gets re-circulated back into the economy in the form of customer withdrawals, loans, etc.
maybe but it kinda skews everything and what we see now. The wealth disparity has this own knock on where yeah the wealthy realize the valuelessness of the currency itself so they try to put their money in anything they can. this inflates the value of things (stocks, homes, etc) such that they have no real basis in reality. People invest just to invest and not because they have researched a particular thing and see value. It has value because everyone thinks it has value. bitcoin is like the ultimate embodiment of this as it should be a currency (not really it uses to much energy) but instead its treated like an investment but it has less value than fiat currency (which is backed by taxation)
But doesn’t this logic only work if people are physically stashing benjies under their mattress? Because let’s say some fat cat keeps a large bank account balance. The bank doesn’t just take the fat cat’s money and put it in a drawer. That money gets re-circulated back into the economy in the form of customer withdrawals, loans, etc.
What am I missing?
maybe but it kinda skews everything and what we see now. The wealth disparity has this own knock on where yeah the wealthy realize the valuelessness of the currency itself so they try to put their money in anything they can. this inflates the value of things (stocks, homes, etc) such that they have no real basis in reality. People invest just to invest and not because they have researched a particular thing and see value. It has value because everyone thinks it has value. bitcoin is like the ultimate embodiment of this as it should be a currency (not really it uses to much energy) but instead its treated like an investment but it has less value than fiat currency (which is backed by taxation)