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Economics Made Simple: How money, trade and markets really work by Madsen Pirie

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What things are worth, and when

“If I had a million pounds,” declared Jane, “I’d spend about a thousand pounds a week and enjoy living really well.” Adam snorted, doing a quick calculation in his head. “You’d be broke after 20 years,” he retorted, “and then you’d be destitute.”

“No,” replied Jane. “I’d buy bonds paying 5 per cent annually, which would bring me £50,000 a year. Then I’d have to spend about £1,000 a week to avoid getting any richer. After 20 years of spending £1,000 a week, I’d still have the million pounds left, and I’d still have an income of £50,000 a year.”

ONE OF THE MISTAKES into which language leads us is the idea that things have some kind of value existing independently of our desire for them. They do indeed have ...

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