"and i bought the stock at IPO. for $40. and then for the next 30 years, the stock never moved from $40. then, the company bought the stock back. for $40. that market would have a net zero sum of transactions. you are correct. it neither gained nor lost wealth. it was merely transferred. HOWEVER, that is an isolated example of ONE transaction. and course my ownership of that one share did not necessarily mean that somebody else was short that item. the fact that in this one isolated transaction, no wealth was created is nifty keen, but it is irrelevant to the structure of the market. that the market can gain wealth and is thus not zero sum. " Is every single share of a publicly traded stock not issued from the company in the beginning or at some point in time ? It is not an isolated transaction because every initial transaction is started this way in a publicly traded stock. For ever dollar that the stock goes up, the company who issued it loses a dollar because their liability increases to the shareholder by the same amount.
With the farmer point is that volatility in the futures market created money that the farmer could use to pay off debt or invest for interest all while being hedged. The $5000 in the brokerage account used as margin to buy $C last september would have grown to say $12,000. The farmer can now withdraw $7000 and still be fully hedged. If the market stayed flat there would be less money created.
Already beat the old record http://www.elitetrader.com/vb/showt...erpage=6&highlight=zero sum game&pagenumber=1
This exactly the same phenomenon as the Stock Market. What has happened in the Market in the past continue to happen in the future. The same as the 1929 crash and has been reproduced in 2000, and will probably reproduce in another 80 years because new comers didn't know the past and will do the same thing. But the Market has a memory, nothing new for the market but new for the new comers. The same as this subject has been discussed in the past, and now we are the new comers... Human nature never change.
Everything that needed to be said in this thread can be found in this previous post. Case and thread are now closed.