Reply To: Angel Gabriel


DMurphy, I actually (partially) disagree with your conclusion… bear with me for a second and judge if this sounds reasonable.

First, if Angel, together with the money left a note to each person saying: “here’s some money for you, and I did just the same for every person in this country”, then everyone will be aware of the new global situation, the next morning ALL the prices will automatically double, and noone will either gain or lose. The Angel’s overnight action will amount to exactly no effect.

But I guess the “Angel Gabriel” model assumes no such note, and so each person has no clue about what happened to others. OK. Then…

Since each and every person in economy is a “seller” in some way (for example a school teacher sells his time and effort and receives a salary), and at the same time each and every person is a “buyer” since he has that Angel’s extra money, all the people will, initially, be exactly the same: they will all have extra cash in their pockets AND the prices of what they all sell will stay the same.

With extra money people will buy more goodies, but not all the goodies equally. All tomato sellers might suddenly sell 5 times as much tomatoes, while schoolteachers (as a group) might not be suddenly asked to teach any new children, simply because no new children were suddenly born. Some teachers may actually lose their jobs because parents will use new money to move kids to better schools – they are sellers who now sell even less then before.

So what kind of persons will gain the most? The ones who spend Angel’s money the fastest (before prices rise), AND those lucky sellers who are getting that extra money via selling more. So ALL early buyers and SOME OF early sellers.

For example, some particularly lucky seller will sell 100 times more because of that Angel’s money. He will become rich no matter if he is quick or slow, whether the prices doubled or not yet.

And who will be the biggest loser? The one who didn’t spend Angel’s money, and whose sales did not increase so he wasn’t able to raise the price. He is both early and late seller.

1. as a buyer – if you spend early you gain, if you spend late you don’t gain (not actually lose, just don’t gain).
2. as a seller – it depends on how much will your sales increase. You may lose or gain.

Angel’s action will hurt the sellers who will sell less, the same, or more-but-not-enough then before, and will benefit everyone else. In the beginning this redistribution of capital will be large, then it’s amplitude will slowly decrease toward the new equilibrium.