How money is created.? So we start with an example straight away. Lets take the example of Google and a writer. Lets take 2 universe. Universe 1- there is no Google. Universe – 2 there is Google.
Universe-1 – if there was no Google. How a writer can research his book? He will have to go to the library. Take a cab of 30 Rs each and lets assume he takes 50 trips. That’s 1500 Rs. He will then have to find out the books he need to research from and then search through the contents and indexes and then retrieve what all material he needs. A time consuming process.
Universe-2 – There is Google. Now a writer can research about his books on internet only. He doesn’t have to take a cab. And so he can cut short his number of trips by say 25. So he saves 750 Rs. He pays 500 for internet. And overall he saves 250 and of course ‘Time’ than the first case.
Now in both the Universe we get the book (Forget, the time saved for now, we will come back to it later). But in 2nd universe we have 250 Rs more. So in other words Google created 250 Rs. Now our intelligent readers will point out that hey 250 Rs is currency so currency was created not money. Okk now we convert it into money. We go and buy 25 breads for that. Google created the purchasing power (which is same as money) to buy 25 breads extra. Don’t go into trivialities that what happened to cab driver and all. Here we are focusing on the product called book alone. We get that in the second universe with 25 breads worth of purchasing power extra. So :
Extra purchasing power created while producing the same good = money created.
Money Saved while producing a good = money created.
So if on Monday you produced 10 breads at cost of 10 Rs and on Tuesday you produced the same quantity and quality at the cost of 9 Rs, then you created 1 Rs on Tuesday. And O fcourse if you produce it at 11 Rs you destroyed 1 Rs. Assuming you sold the bread at the same price on both day.
Now don’t think that money saved is money created. I never said that. In that case she could have saved whole 1500Rs by just not writing the book. But that is not money created because we never got the good called Book. It’s the amalgamation of production and saving at the same time is what is called creation of money. You must notice that I have taken only production side and I am assuming that you are able to sell a product at a constant price. There is money creation at the selling side also. Something we call a brand. Something called profit.
so, My conclusion is we have to use our brain to create money out of scratch...then only we will free from financial anxiety...as money can buy most of service.
Universe-1 – if there was no Google. How a writer can research his book? He will have to go to the library. Take a cab of 30 Rs each and lets assume he takes 50 trips. That’s 1500 Rs. He will then have to find out the books he need to research from and then search through the contents and indexes and then retrieve what all material he needs. A time consuming process.
Universe-2 – There is Google. Now a writer can research about his books on internet only. He doesn’t have to take a cab. And so he can cut short his number of trips by say 25. So he saves 750 Rs. He pays 500 for internet. And overall he saves 250 and of course ‘Time’ than the first case.
Now in both the Universe we get the book (Forget, the time saved for now, we will come back to it later). But in 2nd universe we have 250 Rs more. So in other words Google created 250 Rs. Now our intelligent readers will point out that hey 250 Rs is currency so currency was created not money. Okk now we convert it into money. We go and buy 25 breads for that. Google created the purchasing power (which is same as money) to buy 25 breads extra. Don’t go into trivialities that what happened to cab driver and all. Here we are focusing on the product called book alone. We get that in the second universe with 25 breads worth of purchasing power extra. So :
Extra purchasing power created while producing the same good = money created.
Money Saved while producing a good = money created.
So if on Monday you produced 10 breads at cost of 10 Rs and on Tuesday you produced the same quantity and quality at the cost of 9 Rs, then you created 1 Rs on Tuesday. And O fcourse if you produce it at 11 Rs you destroyed 1 Rs. Assuming you sold the bread at the same price on both day.
Now don’t think that money saved is money created. I never said that. In that case she could have saved whole 1500Rs by just not writing the book. But that is not money created because we never got the good called Book. It’s the amalgamation of production and saving at the same time is what is called creation of money. You must notice that I have taken only production side and I am assuming that you are able to sell a product at a constant price. There is money creation at the selling side also. Something we call a brand. Something called profit.
so, My conclusion is we have to use our brain to create money out of scratch...then only we will free from financial anxiety...as money can buy most of service.
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