The Stock Market is a Bank
People are easily confused by money. We tend to think of money as having real value, because it does have real value to us as individuals. To society as a whole, however, money is only a medium of exchange. It is just information. If I have more money, I am better off. But if society has more money, society is not better off. Here’s one way to think about money. You go to work and do some job within this big production system called “the economy”. As a reward for your efforts, you receive an IOU for a portion of the output of the economy. That IOU is your paycheck. You can consume your portion of the economic output immediately, or you can exchange some of your right to consume now for the right to consume later. In other words, you can save some of your money. Saving is an exchange. When you save, you are trading the right to consume now for the right to consume later. Saving is an exchange of consumption rights. You consume less than you produce now, in exchange for being abl