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Old 11-16-2015, 08:16 AM   #10
Powerplay Quarterback
Join Date: Jan 2011

DEFINITION of 'Zero-Sum Game'
Zero-sum is a situation in game theory in which one personís gain is equivalent to anotherís loss, so the net change in wealth or benefit is zero. A zero-sum game may have as few as two players, or millions of participants.

Zero-sum games are found in game theory, but are less common than non-zero sum games. Poker and gambling are popular examples of zero-sum games since the sum of the amounts won by some players equals the combined losses of the others. Games like chess and tennis, where there is one winner and one loser, are also zero-sum games. In the financial markets, options and futures are examples of zero-sum games, excluding transaction costs. For every person who gains on a contract, there is a counter-party who loses.
Most of the money in our economy is created by banks, in the form of bank deposits Ė the numbers that appear in your account. Banks create new money whenever they make loans. 97% of the money in the economy today is created by banks, whilst just 3% is created by the government. This short video explains:
It simply isn't a zero sum game. If I raise capital (borrow from banks, investors etc.) a lot of that money comes from credit. It is then grown by my company which may then be purchased for more. Let's say Suncor buys my company with cash that they've profited from a similar exploration, discovery, production process.

Or, let's say I use my $5.0 million raised to find a gold mine and sell to goldcorp for $50 million. All the investors earned $10 for every $1.0 invested. They pay back their credit facilities and wealth has been created. Gold corp has done the same thing. They didn't simply go into debt by $50 million whether they used a credit facility or not.
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