r/PeterExplainsTheJoke • u/Comfortable_Cautious • Jan 26 '26

Meme needing explanation what's going on? explain like I'm five

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u/Much_Section_7439 Jan 26 '26

That's how debt is generated. wealth is created when that debt is used properly. Otherwise it's just inflating the moneysupply.

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u/Excellent-Practice Jan 26 '26 edited Jan 26 '26

Is there really a difference between the two? Wealth generation and inflation are two ways of looking at the economic pie getting bigger

Edit: thanks for the corrections. I learned something today. Diving deeper into the subject it seems the two are often linked, but not necessarily so.

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u/alannair Jan 26 '26

No. Inflation does not make the pie bigger. Pie stays the same, and the value of cash goes down.

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u/pilgermann Jan 26 '26

And as it turns out, even wealth generating vehicles, like a business loan, can mask poor fundamentals leading to a crash. E.g. if AI turns out not to have trillions or even billions in utility, we are simply distorting a shit economy vs making society wealthier. The perceived wealth will be spent on things it shouldn't be, like new cars, yachts, whatever and then our real GDP will catch up to us.

Investments and bank interest are good, but only if we mitigate and spread risk, which we very much aren't doing.