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Ewald Hesse

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How come money doesn't follow the law of conservation of energy?

You would think that money should work like the law of conservation of energy, i.e. the same way that it seems to be a finite amount of matter in the universe, there should be also a finite amount of money to be earned or spent....

Topics: Economic Growth money physics politics
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    Dylan Juhasz

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    Jun 11 2011: All things aside, for the question to be valid. Take all of you who remain in the box out of the equation...and we get.

    Money as valuable due to its cap, as those who have the most coercive power will monopolize... like they already do.

    However, any human who reaches an end point, is then not satisfied and must innovate.. (bringing you guys back in). A perfect way to describe what happens. SO ... if money were as the question has it.. taken away from someone to make another richer... yes it would be intensely interesting.

    Maybe it would end up like a rooster syndrome... whereby the rooster must procreate...but in doing so, leaves himself open to attack by the next stage in evolution (his offspring)...and then will eventually fall. Meanwhile, the quest for more is Marxist.. and the question quite fascist...

    I still find it curious... can we make a 'play' out of it?
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    James Walker 30+

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    TED Attendee
    Jun 4 2011: Hi there, great question.
    The answer is simple: We, because humans are amazing, innovate. Through innovation we genuinely create wealth (eg: we make a car twice as fast; build a computer twice the speed etc).
    In the West, since the Industrial Revolution, real GDP has more or less doubled every generation. This is because we innovation and we "create" Wealth.
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    Ewald Hesse

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    Jun 3 2011: I will try to rephrase my original question: wouldn't it be interesting to think of money like matter ,i.e. the same way matter can't be neither created nor destroyed, it should not be possible to neither create nor distroy the value of money. If so, the value of money wouldn't grow or shrink, so it would just be "passed around"...and if fortunes are "created", is not becuase "money grows" but because it has been" taken away" from somebody else, the same way that if you divide it equally there should be enough for everybody...I know that money and physics have no direct relationship concerning this, but I thought it would be an interesting thought...
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    Krisztián Pintér 200+

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    TED Translator
    Jun 2 2011: the two things are completely unrelated. there is no such thing as conservation of number of cellphones either. today, money is created by a simple decision. since it is pure information, you can create or destroy money with virtually zero effort. grossly oversimplified, central banks control the amount of money. they usually do this in cooperation with governments.

  • Steve Bruno

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    Jun 2 2011: http://en.wikipedia.org/wiki/Conservation_of_energy
    I believe you are confusing what the law states. I am not a science major by any means, but as I understand it, there is actually a limited amount of energy in the world. This is constant and does not change. matter can not be created or destroyed, however it can change forms.

    Going back to your question, money has to be finite, otherwise there would be no intrinsic value in it. There needs to be a point of reference for us to determine it's worth.

    • Greg Domjan

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      Jun 11 2011: "limited amount of energy in the world"

      I believe you mean 'in our understanding of this universe'

      Our world gains energy from solar sources, and may also lose energy to space. Matter isn't even fixed, when we eject satellites and have meteorites land.
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