(April 19, 2015 at 9:35 am)Hatshepsut Wrote: Begging pardon. Those $100 utility wipes you were talking about. Doesn't that lead to the geometric progression in the first place?
Suppose $100/day is considered a “basic” income.
Then, to feel noticeably elevated, you need 10% more, or $110. But once at $110 you still need 10% more to feel elevated again, or $121. Then the next step is $133.10. Our society has 100 steps of this kind of elevation at 10% per step. And the 100th step up gets you to $1,387,000/day.
That’s why we have such a huge gap between rich and poor. "Utility" is a synonym for "feed the ego" on the way up and a matter of not wanting to spend the time to monitor $1 if you have millions of them. On the way down, however, that $1 acquires utility as if by magic. We get real tightfisted whenever Josh Brown's investment blog gets nervous about the economy. In the Depression, no bombs or massive earthquakes damaged any American workplaces. The managers just locked the doors and walked away. But it's still utility. Even a billionaire values every dollar if it starts looking like those dollars are circling the drain.
It is true every dollar has value, but they don't give us all the the same utility. Lose a $1 when you have $500 in your wallet is no big deal. Lose $1 dollar when all you had was $1 is a bigger deal. The utility of a dollar changes as you have more less of them.
