Counterfact is ALL. If baseline or presumed counterfact is not carefully stated and applied, the analysis so lacking is useless. All too common, both in life and in professional analyses.
On the contrary, money is valuable only because it can be exchanged for goods and services. If you don't consume it, you don't benefit from it. Investment is good too, but only because it gives you money to spend on consumption in the future. (For instance, when you're retired.)
My high-yield savings account would beg to differ.
Interest paid for loaned money is the price of money. This indicates the time value of money.
The fact that you can rent your money to another entity and earn a profit without consuming the principal means you can benefit from money without consuming it.
If you have your money invested at the risk-free rate, the interest is precisely enough to compensate you for the time value of money. Now, it's indeed possible that your personal discount rate is lower than that. As always when you value something less than other people do, you can sell that thing to them and make a profit.
I agree with you—investing money is good. But you have to consume something sometime, or else it's pointless. If you want to decide how much to consume so as to be able to live off your investments, then good for you. That's a reasonable and prudent way to manage your money, if you are able to. But it's not true that anyone who doesn't use precisely your strategy is just as well off burning their money, if that's what you're trying to say.
I agree -- provided giving money to friends or relatives, donating for charity or other philanthropic or patriotic purposes, political contributions, and leaving money to be passed on to one's heirs count as consumption.
That seems to miss the possibility of using the money to buy food, or a book. Burning money seems worse than buying food because otherwise you can't live, and using it to buy a book to improve the time when you are not working seems better than burning it.
There's a lot of space between using money to make more money and turning it into ashes alone.
Counterfact is ALL. If baseline or presumed counterfact is not carefully stated and applied, the analysis so lacking is useless. All too common, both in life and in professional analyses.
The dreaded "Third Thing" strikes again!
If you aren’t going to use your money to make more money, you’re just as well off burning it.
On the contrary, money is valuable only because it can be exchanged for goods and services. If you don't consume it, you don't benefit from it. Investment is good too, but only because it gives you money to spend on consumption in the future. (For instance, when you're retired.)
My high-yield savings account would beg to differ.
Interest paid for loaned money is the price of money. This indicates the time value of money.
The fact that you can rent your money to another entity and earn a profit without consuming the principal means you can benefit from money without consuming it.
If you have your money invested at the risk-free rate, the interest is precisely enough to compensate you for the time value of money. Now, it's indeed possible that your personal discount rate is lower than that. As always when you value something less than other people do, you can sell that thing to them and make a profit.
I agree with you—investing money is good. But you have to consume something sometime, or else it's pointless. If you want to decide how much to consume so as to be able to live off your investments, then good for you. That's a reasonable and prudent way to manage your money, if you are able to. But it's not true that anyone who doesn't use precisely your strategy is just as well off burning their money, if that's what you're trying to say.
I agree -- provided giving money to friends or relatives, donating for charity or other philanthropic or patriotic purposes, political contributions, and leaving money to be passed on to one's heirs count as consumption.
Political contributions? You might as well burn it
That seems to miss the possibility of using the money to buy food, or a book. Burning money seems worse than buying food because otherwise you can't live, and using it to buy a book to improve the time when you are not working seems better than burning it.
There's a lot of space between using money to make more money and turning it into ashes alone.