Jednadzba 3. is just wrong. So, why don't you go ahead and fix that—since you claim to have proof—and then we can actually talk?
Furthermore, you keep throwing around the word "profit," even though nobody here has even mentioned profit. That equation you're clinging to—that exchange identity—actually refers to the monetary aggregate, not profit. There is a famous equation, much like yours but structured differently, that states this: mv = PQ
What you are essentially attempting to prove is that the monetary aggregate increases if the monetary aggregate increases. It’s circular reasoning at its finest. Anyway, I'm out.
So, now that you’ve laid it all out so nicely, I can tell you exactly where you tripped up. You have an equation where expenses exceed income. Don't be surprised that you feel the need to muddy the waters by saying "the deficit is taken as negative"—it makes it look like you're working toward a loss in your total earnings. In fact, the profit you're seeing is essentially just the absolute value of the deficit. That isn't a coincidence. Your third equation is wrong. The correct equation is:
(3) sum(T) + Td = sum(P) + PP + X You’re misrepresenting government spending (again with this "negative deficit" nonsense, which is actually a surplus): (2) Td = PP + X A deficit is a deficit. A positive number. $167 If the deficit -> x = 500. Government spending is the sum of taxes and the deficit. Taxes = $333, deficit = $167 => government spending = $500. Now it's clear where (3) comes from... The exchange identity is: (a) sum(P) = sum(T)
When you add (2) to that, you get (3)
Once you write it out properly, 4 is simply the sum of (1) and (2): sum(T) + sum(Z) + Td - X = sum(P) + PP Or: sum(T) + sum(Z) + Td = sum(P) + PP + X Subtracting 3 and 4 leaves us with: sum(Z) = 0
Why sum(Z)—which is defined as: sum(P) - sum(T)—must result in 0? I'll leave that for you to figure out. I'll merely point out that you are starting from the exchange identity, where consumption -> sum(T) equals income -> sum(P). 😉
I didn't mess up the sign for the deficit... I was actually calculating based on the surplus. Which, if you think about it, effectively makes it a negative deficit.
Look, I’ve already demonstrated that it’s entirely possible to maintain a surplus while still operating with a profit. 😁
But that logic only holds up if you assume that a deficit equals profit—which simply isn't true in a general sense. Just look back at the very formula you started with.
What you were actually trying to prove was this... You started from these basic identities:
pears + apples = pears + apples
Then you claimed: In the specific case where pears = apples, we have: pears + pears = apples + apples 2 pears = 2 apples / (*1/2) Therefore, pears = apples. Which we already knew, because that was our initial assumption. And based on that, you concluded that: pears + apples = pears + apples *only* if pears = apples (which is a flawed conclusion).
Let’s get back to the fundamental equation: "Total expenditures of all entities" + "Total profits of all entities" + "Government spending" + "Budget deficit" = "Total taxes collected" + "Total gross revenue"
100 + 20 + 30 + 10 = 40 + 120 160 = 160
So, a surplus of 10 and a profit of 20. Based on your twisted logic, am I to understand there can be no profit without a government surplus? 😂 profit = 120 - 100 = 20 -> checks out government spending = taxes - deficit = 40 - 10 = 30 -> checks out
Your starting equation actually stems from the following:
1) Government spending = taxes - deficit (since you're treating the deficit as a negative value) 2) Profit = gross revenue - gross expenditure
When you write out the equations, they look like this: 1a) government spending + deficit = taxes (that works) 2a) gross expenditure + profit = gross revenue (that also works)
By adding 1a) and 2a), you arrive at your original equation.
Equations 1) and 2) are independent variables as you've set them up. There are infinite solutions to these equations for any possible relationship between deficit and profit that satisfies all your conditions. If you pick one highly specific scenario—which is exactly what you did—of course it will fit the equations. However, that is by no means proof that it *only* works when your specific scenario is met. In fact, I just demonstrated that it works in at least one other case as well. That alone is enough to dismantle your claim that profit cannot exist without a deficit.
Good grief, where on earth are you getting that from? My formula only holds up if—and I’ve already demonstrated this—the deficit equals twice the profit.
And then there's you, lacking both the profit and the deficit figures required to actually make your argument stick. How exactly do you account for that?
Good grief... My method for demonstrating the relationship between profit and deficit is absolutely sound. There’s a derivative right there at the top—so go ahead, try to find the error. You won't.
There are countless different values that can satisfy that initial equation, depending entirely on how you balance the profit against the deficit or surplus. You can verify this yourself just by plugging in some numbers.
First off, you haven't actually proven anything here... If you want to make a point, try setting up an equation where profit equals surplus—then we can talk about proof. Any supposed link you think exists between profit and a deficit or surplus can be demonstrated quite simply by applying these identities. Secondly, there’s absolutely no mention of the money supply in your argument... Even if you had managed to prove that the government requires a surplus or a deficit (which, let's be honest, you haven't), you still haven't shown that printing money is a necessity to achieve that. A deficit or surplus can exist without any change to the money supply whatsoever.
Maria Thomas48 said:Here is a similar, pretty intense example. Some kid was using eBay to trade up from a single item, swapping one thing for something better and better. He went pretty far in a short amount of time, but the end result was incredible. So, who won and who lost in that scenario?
Bartering isn't really what this sub is for. It just boils down to the whole "chicken or the egg" argument. There are way too many variables affecting the price of any single product. Like weather, how long production takes, whether the workers are skilled, scarcity—like a two-headed chicken, I guess. Talking about this is kind of pointless.
This is a serious discussion with a mathematical foundation, and there are some really interesting and useful conclusions you can pull from it.
What’s your take on this? If you head down to a local farmers market and pick up a bag of apples for $1.75, who really wins in that scenario? Is it you, or is it the vendor?
Of course, one could just as easily argue that a larger surplus would inevitably lead to higher profits. Honestly, you can manipulate the data to show whatever correlation you want between profit margins and either a deficit or a surplus—it’s all about how you frame it. The fundamental issue here is that we are starting from the flawed assumption of identity.
Look, I’m sticking to my guns here: deficit equals twice the profit—and since you seem to need things laid out clearly, I’ll prove it using your own logic:
Total expenses + profit + government spending + deficit = total tax revenue + total income
Now, if we plug in my premise:
Total expenses + profit + government spending - 2 * profit = total tax revenue + total income
Which simplifies down to:
Total expenses - profit + government spending = total tax revenue + total income
Since we know that profit is just total income minus total expenses, let's rearrange it:
Government spending = total tax revenue + 2 * profit
Now, take this next equation:
Government spending = total tax revenue - deficit
When you set them equal to each other:
Total tax revenue + 2 * profit = total tax revenue - deficit
You completely forgot to actually prove your initial claim—that profit can't exist without a deficit. Which means you haven't touched point number 4 at all. Once you manage to demonstrate that, then maybe we can move this conversation forward.
That condition is always met—assuming we're treating "Budget deficit" and "Government spending" as positive values, obviously. Honestly, you could have just said instead of 7: 3 > 1
The real issue? You haven't accounted for the actual money supply in circulation. There isn't a single variable for it in any of these equations.
Trade is an entirely different beast. The system you’re describing is purely imaginary—something that couldn't actually function in the real world—so any conclusions drawn from it are basically worthless. Let's look at the logic: one guy holds some gold, the other holds a painting, and there's absolutely nothing else involved? WTF? What are you even supposed to conclude from that? In that scenario, the gold is practically useless—maybe just as jewelry, if we're being generous. And if Joe Biden trades a painting for gold, it's simply because Joe Biden wants his wife to wear gold jewelry. Both parties come out ahead—Joe Biden gets his gold, and the other person gets their art. You can't view gold as "money" in this context, because money barely even exists in the system you've constructed. To start with, trade isn't a zero-sum game. A merchant's profit isn't someone else's loss. Both the seller and the buyer walk away better off than they were before. Now, sure, there are types of trading that *are* zero-sum games, but that's a completely different conversation.
Good grief... 😂 It’s like pushing a boulder up a hill just to watch it roll back down every single time. 😁
So, what you've actually done here is strip the entire system down to just two families who don't produce a single thing of value—they just trade illusions back and forth, right? Sure, that qualifies as a zero-sum game—where one person's gain is strictly another's loss—but let's be clear: that isn't economics.
Honestly, I’d suggest you go back to basics and start thinking in terms of bartering... Money seems to be clouding your judgment so much that I’m starting to doubt you'll ever reach a coherent conclusion. It might be wise to wrap your head around the fundamental laws of supply and demand through simple trade first, then perhaps—and that's a big maybe—try introducing currency into the equation later on.
I honestly don't get where this idea comes from—this notion that if one party walks away with a gain, someone else must be losing out? It’s nonsense. A fair exchange happens strictly because it benefits everyone involved. If both sides weren't coming out ahead, the deal wouldn't even happen in the first place, would it?
And let’s be clear—profit doesn't mean some guy is just hoarding piles of cash in a Chase account.
First off, everyone has the capacity to generate "profit" in this little game of yours. It isn't some exclusive privilege reserved for the top tier. Money exists as a medium—a way to swap goods and services. You provide something of value to someone else, you get paid. You take something from them, you pay up. At its core, you’ve just recreated a barter system, only you're using a middleman to facilitate the trade. When someone operates with a "profit" motive, it actually benefits everyone else in the marketplace. They receive the product or the service while they hold onto their capital for a moment. So, here is my first point: a person who "accumulates" wealth is effectively acting as a benefactor—someone who restrains their own immediate consumption and indulgence for the sake of others. Something to chew on during your New Year's Eve celebrations. 😉