Where did the other dollar go, Jeff?
This is an interesting article but it starts off on the wrong foot for me:<p>&gt; This is patently ridiculous. Every single dollar of compensation paid out is done transactionally: it is used to purchase labor. In a typical transaction, no value is created.<p>This, as I understand it in a limited fashion, is not true.  There is a concept of the velocity of money in which more value than the initial transaction is created:<p><a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Velocity_of_money" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Velocity_of_money</a><p>This is, in part I believe, why a nation&#x27;s GDP can exceed it&#x27;s nominal cash in circulation.  In particular, the Great Depression was a period of low monetary velocity and yet staggering inflation; the term &quot;stagflation&quot; (stagnation + inflation) was coined to describe this phenomena.<p><a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Stagflation" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Stagflation</a><p>Which in turn calls into question the following criticism:<p>&gt; But however you look at it, taking full credit for every single dollar of compensation as value creation— as if Amazon, and not the US Mint, created those dollars, and as if the many, many millions of hours of labor consumed by the company in return were valueless— is a ghastly overstatement.<p>While I would never want to make it seem like Amazon is some sort of altruistic entity who simply makes the lives of those on it&#x27;s payroll better, it is not as ghastly an overstatement as claimed.  There is a reason recovery from the Great Depression involved <i>job creation</i> through The New Deal and war-time production and not simply the US Treasury &quot;creating those dollars&quot;.<p>These kinds of economic inconsistencies continue throughout the post.  In particular there seems to be a pervasive belief that Monetary Supply is finite&#x2F;controlled by the Federal Reserve and therefore cannot be used to measure value creation:<p>&gt; But the value you created isn’t the money. The money already existed and was floating around the economy long before you picked up the brush. The value you created was in the art, which is now in someone else’s hands.<p>This is a false premise.  Dollar-value estimations of created value like GDP are often imperfect measurements, but they <i>do</i> exist; furthermore, they often exceed the nominal amount of financial notes in circulation.  There also certainly is <i>additional value</i> that isn&#x27;t captured by a dollar value, such as the value an owner places on a created piece of art, but that is not the same as <i>no</i> monetary value created.<p>I don&#x27;t know who the author is, but even my limited grasp of economic theory makes me question the main thrust of their arguments.  But I also know my grasp of economic theory is threadbare at best, so perhaps I am completely off base.