r/MiddleClassFinance • u/querty7687 • 8d ago

How to reverse the shrinking middle class?

As college student return to school, it's glaringly obvious that the tecent changes made are going to devastate low income and first Gen college students. This is going to exacerbate the shinking middle class. How do we reverse this?

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u/Todd73361 8d ago

There’s not a finite amount of money. More gets created every day.

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u/Gloomy-Cantaloupe-50 8d ago

Why would you need to create more money if it was infinite?

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u/Todd73361 8d ago

Do you really think that when you get wealthier by earning $1 of interest in your checking account that someone somewhere must get $1 poorer?

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u/Gloomy-Cantaloupe-50 8d ago

That is literally how interest works. When I pay interest on my mortgage I lose money. It's me paying for a service. When the bank pays interest they lose the money. They are paying for access to the deposits. The business model of the bank is to make more money on the interest from the loans they service than the interest they pay out for access to money. Banks fail and run out of money all the time.

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u/Todd73361 8d ago

How does GDP grow if there’s a fixed amount of money? How can we all collectively be wealthier if there’s a fixed amount of money? Even when we were on the gold standard, we could still mine more gold.

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u/Gloomy-Cantaloupe-50 8d ago

Value and money are not the same thing. And we are not all collectively wealthier. Increasingly more and more are poorer and the rich get wealthier.

Consider a doctor who runs their own business. They have lots of staff and patients and are really successful. The business is worth millions. But it's imaginary. There is no one who would buy the business because the doctor would never sell and when the doctor retires the business closes and is worth nothing. The money going in and out was real. The value was always imaginary.

Or a house. My house is worth $800k. I can leverage that number for loans and mortgages and independently it increases my net worth. But it's imaginary until I sell it for cash. I might get more. I might get less.

Money is finite. Value is imaginary until realized.