The first prerequisite to this is understanding that money is a zero sum game. To explain that, let's say I pick a random star in the sky and ask you how much you would pay for it (right now, today). You would own the star but there's not really much you can do with it as of this point in technology, so you might pay $10, $100, $1000 or maybe $1m, but probably not much than that because there's nothing we can do with stars at this point (and on the other hand you might only pay a penny or fraction of a penny for it). That being said, we can price everything in the world - and we can measure them in whatever currency - dollars, bitcoins, McDonald's double cheeseburgers, whatever ___ With that established, I see the wealthiest people in the world controlling let's say 90% of the wealth (though it could be 99% or 50%, I'm not sure) Anyway, they have expenses like the rest of rest of us, spending money on their mansions, yachts, kids Harvard tuition, etc, in this way money is flowing outwards. I see at like a rain cloud, pouring down rain. To bring the money back in, they create economic bubbles (and some of these may be economically "ripe" or even just happen on their own (but they certainly could create a bubble or make it stronger (refer to US housing bubble which was fueling in 99-00 by policies which put more buying pressure on homes, thus predictably causing the price to rise (supply and demand). These wealthy people know there is going to be a bubble, so they buy the assets early on. The thing is, everyone gets richer when the price goes up (like US real estate did, and peaked in 2007). But the wealthy also know to sell (or even to short at that point). In this way they “cash out." The masses lose money in the crash, but they have cashed out and locked in their profits. To complete my raincloud analogy, when they spend money, it's like the cloud raining, and then by using bubbles, it's like the raincloud re-absorbing (and by doing so, they consistently retain (or increase) their wealth). This is just a rough outline, but I have been thinking about this for years. Thanks for taking your time to read this I appreciate it and would love your feedback.
Umm....the wealthy do NOT like bubbles. I'm not sure where you are getting that from. Also, the wealthy don't manage their money, money managers of some type do. And a large majority of it is in trust. I'm not sure what to tell you, but you might want to go back to the drawing board.
Is there really enough sp500 corporate equity to go around for all the money in the world? Is it probable that the vast majority of money in the world achieves a return much less than US equities, more comparable to prevailing interest rates in developed countries? No answers here..just questions.
Can you comment this case: Warren Buffett Net worth: $39 billion Annual property taxes: $13,859. Residence: Omaha, Neb.
He use to live in Laguna Hills California much of the year among other properties. Not sure where he lives now, but this is just one example of multiple properties. http://www.realtor.com/advice/warren-buffetts-former-home-in-laguna-beach-on-the-market-photos/
That was his wife's house when she was estranged. He might be "down to earth" but his kids and wife enjoyed more luxurious things - though they still lived like bumpkins by Russian billionaire standards.
There is a difference between Buffet and the Russian Oligarchs : - Buffet is known to have made his money via his acumen - the Russian Oligarch - according to Russians - via literally I quote looting a country of its assets and moving abroad with the loots. So the psychology of looting goes well with being big spender/consumer. So we can not really compare Buffet spending habits because of the way he made his money, with Russian oligarchs. Anyway, if billions are not protected, there will always be someone willing to spend it.
I was pre-empting someone saying "but he has a private jet and his son owns a farm and 3 million dollars for a house isn't middle class living." Otherwise, I agree with your post.