Forum Post: It is NOT zero-sum...
Posted 13 years ago on Oct. 17, 2011, 2:25 p.m. EST by BrainC
(400)
from Austin, TX
This content is user submitted and not an official statement
Why do some people keep saying for someone to make money someone has lose money? It is not zero-sum.
For example, if I borrow 100k from the bank, I can build a house. I pay the contractors to build the house. I pay the concrete contractor to lay the foundation. I pay the framers to build the house, the roofers, plumbers, electricians, etc, etc... Everyone associated with building the house is happy because they are employed and earning money. Once the house is built, I sell it for $150k. The person that buys the house is happy because they get a nice house that they could not build themselves. I pay back the bank and I made money for my efforts and risk. Win-win...
Not zero-sum
the fed loans to the bank
they bank takes that money and loans it back to the fed
It's pretty much zero-sum in a recession unless government fulfills its role as spender of last resort. Not enough wealth is being generated for everyone to benefit from the economy, and so the consumer/labor side falls further behind with each transaction.