Economics 101

A Facebook commenter said the following:

the problem with socialism is that you eventually run out of other people's money

So now, I feel the need to give a basic lesson in economics to the serially-idiomatic.

On this planet, we have a limited pool of money.  That money represents human capital - that is, every dollar was bought with someone's labor.  A million bucks is the same as 137,931 man hours at minimum wage (which is more than the average amount of hours a person will actually work in a lifetime - thus, a million bucks is a little more valuable than a human life in the U.S.). 

For these reasons, as long as people are working, there will always be money representing their work.

But, let's assume that all of the jobs somehow dry up, too.  If we were to freeze all work, right now, we would still have all of our amassed wealth.

See, wealth and income are different.  Wealth is the amount of money you've stored up.  Income is the amount of money you receive for your work.  Wealth is your house, your car, your land, your clothes, your electronics, and so on.  Everything you own.  It's also your stocks, your money in the bank, and so on.

According to Credit Suisse, the U.S. has 83.7 trillion dollars of wealth, which accounts for 31.8% of total global wealth.  Per household, that's about $348,000 in wealth.  Of course, I don't know too many people with $348,000 in total assets, and I'm certainly not one of them.  That's because of the growing wealth inequality in America, which is causing the biggest gains in wealth to go to the richest among us.

We could sell every asset in America to other countries, redistribute everything, and still manage to cover wages for more than 10 years - and that's assuming that all the money for all those things is now leaving the country and not coming back out to other Americans.

But that's also not what's happening.  In the U.S., the GDP was 17.4 trillion in 2014.  The U.S. spends only a little less than 42 billion importing goods (over our exports) right now, which represents only 0.24% of that total.  The vast majority of our GDP is spent inside the U.S. - that means that 99.76% of American money stays in America.  Most of that money is circulating.

So it's physically impossible for the money to simply disappear.  Instead, it circulates - and for the most part, it circulates within the system that created it.  It will never dry up. 

There is something, however, that can dry up the well: savings.  In a strong economy, people naturally save up money for harder times ahead, though if they didn't, times would be even more prosperous but we'd lack a safety net.  Newsweek explains how this is going horribly wrong right now:

Which brings us back to the savings rate. You've already seen that in normal recessions, the savings rate goes down and cushions the blow to consumer spending. But now we are in the midst of a strange kind of backward recession. As lenders retrench, instead of the savings rate going down it is, in fact, going up. This is what economists call "de-leveraging": In economic terms our "savings" go up because our borrowing goes down. This isn't savings as you normally think of it. It's an enforced regime of austerity thrust upon us because having relied on debt for so many years, we have no way to keep funding consumption.  (source)

Banks' savings are taking that money out of the economy.  The exact problem the Facebook commenter complained about is happening, just not for the reasons he thought.