I hear a lot of people talking about economic growth, as in over time there is more value in the economy. For example, index funds like SP500 are growing consistently over decades a. On the other hand, economy is just buying stuff from other people with money they got from another person they produced stuff for, which he then sold to other people for money, like a closed loop. If that’s the case how is more money added to the system? how can the market as a whole grow instead of some companies profiting on the expansion of others?
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As a general rule it’s important to state as a base level of understanding that money doesn’t really exist. The value of money itself goes up and down depending on supply and demand, and money can be printed by central banks, and be valued and devalued in strange ways.
The only consistent concept holding anything together when discussing this topic is inherent value. In simplest terms: what some object (or service) is worth to someone else, and what they’re willing to trade for it. Trade is the actual currency of the world, not money.
In the most basic understanding of how the world works, money purely exists to make trade transactions easier. Instead of trading objects for other objects, money exists as a conceptual convenience to avoid having to trade object for object. It doesn’t really exist in a literal sense. It’s an imaginary representation of trade.
And once you come around to the idea that money doesn’t exist, only trade, suddenly the notion of where money comes from no longer matters.
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