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Does Money Create Income or Income Create Money?
What do we mean when we talk about wealth creation?
When I tell people about “generational wealth”, they look confused.
When I tell people that “capital begets capital”, they look even more confused.
In the absence of money, an income creates it. When your money has enough mass and scale, it creates income.
The power of proportions
Everybody knows about proportions. 10% of a hundred is ten. These things are obvious.
But we never actually think about what proportions mean at scale.
Let’s think about proportions for a moment.
If you had $10,000, and there was some company that paid 10% in dividends each year. For the sake of the argument, agree that this company exists (Currently, IEP pays about 15%). At year-end, you would have $1,000 on top of your $10,000. That’s without stock price movement.
If you had $1,000,000, and you did the same, the year-end payout would be $100,000. That’s pretty crazy.
The answer is both, but in and the reason is in the capitalistic system. The United States is the world’s strongest economy. However, with that strength and power comes issues.
