Steph Curry, the highest paid NBA player, makes $37M a year. That’s a lot of money. But Joe Lacob, the majority owner of Golden State, is worth $1.5B. He could pay Steph Curry to play for 30 years if he never made another dollar. And Lacob isn’t even in the top 10 wealthiest NBA team owners. Stanley Kroenke, owner of the Nuggets, could pay the entire salary of two Golden State, indefinitely, just off the interest from his wealth.
Super rich people get even richer, while making talented poor people rich, by paying the talented people to fight in arenas and selling tickets to poor people.
When you’re wealthy, you learn to think about money differently. The first rule is to always preserve capital (money), especially that can be invested to earn more money. The second rule is always use leverage (other people’s money) when you can. The third rule is to look for the tax advantages in every transaction.
So if you have a billion dollars that is invested an earning a good rate of return, the last thing you want to do is convert it to cash to buy a yacht that will depreciate in value.
So let’s assume that Billion is earning a modest 7% return, or a cool $70M per year. As a major customer of a bank, you’ll be eligible for preferential interest rate - which is usually pretty close to the Fed fund rate (currently 2.5%). So instead of liquidating your investments and paying cash, you finance the yacht at less than 3% interest and your investments keep generating cash to pay off that loan.
There is only one class in the community that thinks more about money than the rich, and that is the poor. The poor can think of nothing else.
My experience is the time equivalent of a high-interest loan cycle, except instead of money, I borrow time. But this kind of borrowing comes with an interest rate of its own: By focusing on one immediate deadline, I neglect not only future deadlines but the mundane tasks of daily life that would normally take up next to no time or mental energy. It’s the same type of problem poor people encounter every day, multiple times: The demands of the moment override the demands of the future, making that future harder to reach.
There are three types of poverty: money poverty, time poverty, and bandwidth poverty.
The third type is fed by the other two: If I’m focused on the immediate deadline, I don’t have the cognitive resources to spend on mundane tasks or later deadlines. If I’m short on money, I can’t stop thinking about today’s expenses — never mind those in the future. In both cases, I end up making decisions that leave me worse off because I lack the ability to focus properly on anything other than what’s staring me in the face right now, at this exact moment.
Examples for stores of value other than money are:
- Bonds
- Collectibles
- Gemstones
- Gift economy relationships — value is stored as social reputation
- Livestock
- Fine wine
- Precious metal
- Real estate
Aristotle describes the basic function of money as a universal instrument of quantitative measurement — “for it measures all things” — making things alike and comparable due to a social “agreement” of acceptance. In that way, money also enables a new type of economic society and the definition of wealth in measurable quantities, such as gold and money.
Fiat currencies only have value because the government maintains that value; there is no utility to fiat money in itself.
Fiat is inconvertible and cannot be redeemed simply because there is no underlying commodity backing it.
In this sense, US dollars are now “legal tender,” rather than “lawful money,” which can be exchanged for gold, silver, or any other commodity.
Fiat currencies gained prominence in the 20th century in party because governments and central banks sought to insulate their economies from the worst effect of the natural booms and busts of the business cycle. Since fiat money is not a scarce or fixed resource like gold, central banks have much greater control over its supply, which gives them the power to manage economic variables such as credit supply, liquidity, interest rates, and money velocity. For instance, the Fed has the dual mandate to keep unemployment and inflation low.
A currency tied to gold, for example, is generally more stable than fiat money because of the limited supply of gold. There are more opportunities for the creation of bubbles with fiat money due to its unlimited supply.
One reason this has merit is because governments demand that you pay taxes in the fiat money it issues. Since everybody needs to pay taxes, or else face stiff penalties or prison, people will accept it in exchange.
Hyperinflations have occurred throughout history, even when money was based on precious metals; and all contemporary hyperinflations have begun with a fundamental breakdown in the real production economy and / or political instability in the country.
Legal tender is the legally recognized money within a given political jurisdiction.
The national currency is legal tender in practically every country. A creditor is legally obligated to accept legal tender toward repayment of a debt.
By default (and design), legal tender laws prevent the widespread adoption of anything other than the existing legal tender as money in the economy. A check, or a credit swipe, is not legal tender; it functions as a money substitute and merely represents a means by which the holder of the check can eventually receive legal tender for the debt.
The legal tender also makes monetary policy possible. From the point of view of the issuer, legal tender allows the manipulation, debasement, and devaluation of the currency by the issuer to obtain seigniorage and facilities the issuance of fiduciary media by the banking system to meet the needs of trade.
As a general rule, assets that have a finite useful life depreciate rather than appreciate.
Finance is a term for the management, creation, and study of money and investments. Specifically, it deals with the questions of how an individual, company or government acquires money — called capital in the context of a business — and how they spend or invest that money.
All currency is based on a belief that it’s worth money. Gold has value because people are willing to pay for it. Someone’s word is only worth something if it’s valued, if you believe it’s worth something. The more often a Lannister pays his debts, the more his word is worth, because you have a belief that you’ll be paid back. So it’s in their interest to repay you, and it’s in there interest to remind your that they’ll repay you.
Tiền mới chỉ sự thô tục, thiếu nhã nhặn và tính khoe khoang của những người mới giàu, những người chưa có kinh nghiệm sống trong tầng lớp này và không biết đến hệ thống các giá trị của những người thuộc dòng dõi “trâm anh thế phiệt,” những người thừa kế sự giàu có từ thế hệ trước.