What’s it called if I buy something like a sandwich, then consume it, and the net worth of society has now shrunk by 1 sandwich? Versus buying something that keeps its value.

Question

Maybe a better example would be a country getting leveled in a war. All of the money is still there, but now everyone is poor and has no net worth. How does that work?

It seems kind of like losing that amount of money, even though we didn’t?

In: 3475

Answer 1

The first problem your 5-year-old world view has is putting a fixed value on things.

Say you buy a sandwich for a dollar.
What is the sandwiches worth?
It is _not_ one dollar – otherwise, if the next guy offered you a dollar for your sandwich, you would sell it to him, because one dollar is one dollar(‘s worth of sandwich), right?
Wrong.
You bought that sandwich, because you valued the sandwich higher than the one dollar.
And the vendor valued the dollar higher than the sandwich, so he sold it to you.

So, What’s the sandwich’s value?
Different people value it differently.
The trade (sandwich for dollar) was a net gain in value for both parties (both gained something they valued higher than what they had before), so, a net gain for society.

You ate the sandwich, which was good for you, giving you energy and joy. Nothing was lost here.