There is more to this discussion (for and against) than this, but I think you may have missed the point.
Money is not really a resource in and of itself. It's kind of a 'point system' we use to allocate finite resources.
I do think that this is a very important concept that is very difficult for many people to grasp.
If you took 50% of each person's money on the planet and burned it in a fire prices would (eventually) drop by 50% on most products.
If everyone has less money, they buy less things, and so there is a surplus of things. This causes the price of things to drop so that an equilibrium is reached. It will also (ideally) cause a drop in wages, etc so that things are still distributed.
The purchasing power of your money depends on the amount of resources to be allocated and the amount of money the people that want the resource are willing to spend.
So if banks hoard money, it really does not effect your purchasing power negatively until someone tries to spend that money on resources you want.
This is the basic concept, it doesn't mean that there are no consequences to these actions. If you hoard everyone's money (same as burning, but it can come back) you basically get deflation.
Deflation is bad because things like salaries don't scale down easily. People get upset when you dock their pay and most companies would rather just cut hours and lay-off employees rather than upset the entire company.
This is bad because the company is now over-paying (and over-working) workers for their services and there are lots of unemployed that can't find jobs.
So these changes don't happen as easy as the simplified example above, but they are real and very significant effects that need to be taken into account.
This is a good point, supply and demand affects prices, but I /think/ you have made the assumption that the goods bought by the wealthy do not overlap the good bought by the poor.
Housing is the classic example, where the rich have pushed the pricing up so high that even moderately wealthy people can't afford to buy houses outright without multiple years worth of salary. The result is a shift towards renting rather than mortgaging, which mostly gives even more money to those people who drove the prices up to begin with...
Money is not really a resource in and of itself. It's kind of a 'point system' we use to allocate finite resources.
I do think that this is a very important concept that is very difficult for many people to grasp.
If you took 50% of each person's money on the planet and burned it in a fire prices would (eventually) drop by 50% on most products.
If everyone has less money, they buy less things, and so there is a surplus of things. This causes the price of things to drop so that an equilibrium is reached. It will also (ideally) cause a drop in wages, etc so that things are still distributed.
The purchasing power of your money depends on the amount of resources to be allocated and the amount of money the people that want the resource are willing to spend.
So if banks hoard money, it really does not effect your purchasing power negatively until someone tries to spend that money on resources you want.
This is the basic concept, it doesn't mean that there are no consequences to these actions. If you hoard everyone's money (same as burning, but it can come back) you basically get deflation.
Deflation is bad because things like salaries don't scale down easily. People get upset when you dock their pay and most companies would rather just cut hours and lay-off employees rather than upset the entire company.
This is bad because the company is now over-paying (and over-working) workers for their services and there are lots of unemployed that can't find jobs.
So these changes don't happen as easy as the simplified example above, but they are real and very significant effects that need to be taken into account.