Posts by Maria Thomas48

neonhound10 said:I've been following this thread for a while now, and honestly, I'm having a hard time figuring out what your actual argument is supposed to be...

Are you really suggesting that money exists within a closed system??

The way you're trying to explain this feels a lot like someone attempting to walk right into the Zenon paradox...

It’s just basic logic, really. On a global scale, Earth has to produce new money somehow. And we can pretty much rule out gold deposits as a viable source.

Which means, if printing happens somewhere, it could just as easily happen in America. The mathematical Jednadzba tells us exactly how much. Are there any other economic equations out there that specify the exact amount of money that can be printed to cover a budget deficit without triggering hyperinflation?

If those formulas exist, why isn't anyone in this conversation willing to present them?

How is it okay to issue new money abroad? If you look at reality, the way the USA owes money to the Federal Reserve looks exactly like primary issuance—except for the part where the debt to the Federal Reserve still accrues interest on value that doesn't actually exist. I mean, how can a bank grant a massive credit line without devaluing the currency, simply because they haven't actually earned that money? The USA's debt grows exponentially every year, which just confirms my point: you shouldn't finance a budget deficit through credit. Especially when that credit is just newly printed money.

When I first started this topic about the financial system and the source of money, I had no clue that thinking about how new money enters the system would lead directly to connections between a community's profit and its budget deficit.

Some economists still can't wrap their heads around the fact that these two things are directly linked.

Even a few months ago, I was thinking that America should probably have a balanced budget, or maybe even a surplus. It always seemed strange to predict a deficit. It looked like a deliberate rush toward debt. But it turns out that making a deficit makes sense; it's actually a good thing. The only problem is doing it by taking on more credit.

The discussion drifted into budget planning, but it was inevitable to build a mathematical model that includes the state budget and integrates its deficit into the whole picture. It all ties back to the community's financial system.

And my message is simple: I am just asking someone to prove me wrong.

So far, every attempt to debunk this using examples or other equations has fallen flat.

It would be great if I were wrong, but so many current events seem to align perfectly with these claims.

I even read dirkati Krueger " Makorekonomik", and while it doesn't say much concrete about primary issuance, it does talk extensively about the growth of the USA budget deficit.

So, how can a person not connect the dots and realize you can't pay back a loan (plus interest) unless you pull those massive dollars back in? To do that, a budget needs a surplus. My formulas show that a surplus is the only way to make this work. But a surplus is an impossible mission. In plain English, you either sink assets into debt, kill off entrepreneurs with taxes, or you have to take as much as the debt amounts from others (by maintaining a huge export surplus). Basically, it ends up being pure enrichment for creditors. You let people create things and earn money, then you demand all that money (plus interest) back. You see immediately that it’s a net loss in terms of interest. In the end, you have new goods, but the system has even less money in circulation because it was spent on interest. Using an export surplus would just shift the problem to other countries, causing a crisis there, leaving you with nowhere left to profit.

Sure, it’s all gotten complicated, but from my perspective, I’ve had a total epiphany regarding the flow and balance of money in the financial system. It's a depressing realization, and it might drive me into a depression if I didn't believe that talking about it might actually give us a chance at a Happy End.

Andrew Booth29 said: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.

Here is the proof that the math works out.

S1: cost=2. That includes tax of 1 and S3:1
sales=3. Of which S3:2, government:1
total earnings=1

S2: cost=4. That includes tax of 2 and from S3:2
sales=6. Of which S3:3, government:3
total earnings=2

S3: cost=10. That includes tax of 5 and from S1:2 and from S2:3
sales=12. Of which S1:1, S2:2 and government:9
total earnings=2

Government: cost 13, consisting of S1:1, S2:3, and S3:9
taxes collected: 8. From S1:1, S2:2, S3:5
deficit: -5

It shows that all revenues are covered by expenditures. It's strange how the total earnings amount matches the negative deficit figure exactly? Last time there weren't any objections to this, just complaints about the formulas being wrong. How is it that my "wrong" formulas result in perfectly balanced bookkeeping?

There isn't even an explanation for those 30 uncovered units in your example that specifically connects that discrepancy.🙂

Andrew Booth29 said:Heh... 😂

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). 😉

So, look, your proof is brilliant, really. It’s not just okay. But here’s the thing—it falls apart completely when you apply it to a hypothetical extreme case. It just sinks.

Imagine if the government was run by an automated computer system and there was only one person left in the entire country. It would be a strange setup. If that one person earned any income, the state would automatically record that as an expense on its books. And if that person managed to charge for services—say, maintaining the very computer running the show—to turn a profit, then the state, being governed by that machine, would inevitably have to run a deficit. Just a mathematical certainty.

Trying to relativize things like this is just a way to cloud the obvious facts. It’s basically just an attempt to beat around the bush after making clear mistakes, spinning empty words instead of just admitting they were wrong.

That’s all there is to it.

Douglas Reed3 said:So, you're basically saying we should just print up more love, distribute it everywhere, and suddenly we'll all be swimming in profits and living happily ever after? Is that really how you see it?

These formulas apply to every single country. You really think everyone is just being foolish and taking out foreign loans to cover a state deficit? It seems pretty obvious to me. If you can only generate profit through a budget deficit, then it doesn't matter how much profit you actually make. You still have to take out a loan just to turn that profit into actual cash. And then, obviously, you need that cash just to pay back the previous deficit plus the interest.

If you don't believe this, that's on you. Honestly, if I were running a major bank, of course I’d be all for the idea of financing the federal deficit through credit. It's just good business. You basically secure a client for life—someone who, regardless of how much profit they turn in down the road, will never actually be able to pay back what they borrowed. And if that credit is issued through secondary money printing? Even better. The satisfaction is huge. Most of the money used for that loan is essentially printed out of thin air, so it doesn't actually cost the bank any real capital.

The bottom line is pretty simple. When you're looking at paying off foreign debt used to cover a budget deficit, you really only have two ways out. You either sell off assets, or you generate enough of a surplus through trade to balance the scales. That's just how it works. If you just look at the math, it’s pretty clear that the entire deficit was essentially swallowed up by corporate profits. If we actually wanted to pay down the national debt, every single entity involved would have to operate at a loss—specifically, a loss equal to whatever the repayment installment is. That creates a bit of a paradox, doesn't it? It implies that for global profitability to stay afloat, the new budget deficit actually has to be larger than last year's just to balance things out. Now, if the government had the option to settle its debts through commodities or goods instead of cash, that could act as a source of surplus. Then, theoretically, this whole scenario becomes possible to execute.

It gets even worse when you realize most countries are already following the American model for financing their deficits. It’s probably all happening under the thumb of those monetary wizards.

So, at the end of the day, we're all just living on one isolated Earth. My formulas apply here 100%. It really comes down to whether one person wins only because someone else loses—meaning the total profit equals zero and there's no actual increase in real money value. From what I can see, that isn't how it works. There has to be some kind of deficit generator somewhere out there, something pumping new money into the system in exchange for profit. If that actually exists, I don't see why we wouldn't want to grab a little slice of that cake ourselves. Just a tiny bit, nothing noticeable. What's a few million souls compared to six billion?

The argument goes like this: we can't shake this debt unless we sell off assets to foreigners and generate a massive trade surplus. But honestly, that doesn't solve anything long-term. Not unless we start running a trade surplus that actually outweighs our budget deficit, or—which is clearly the smarter move—we start tackling the deficit through primary issuance (specifically targeted for certain things). That second option makes more sense. It would mean the entire nation's profit aligns with the trade surplus. Because at the end of the day, the internal profit balance equals the budget deficit. I just wonder how realistic that is when you have millions of retirees to account for.

Right now, a smart move might be introducing a secret issuance of dollars. Just printing new money from new credit, and keeping it going for years until the debts are cleared. We’d just have to manage for 14 years without any primary issuance to avoid major shocks. The economy would probably go through the wringer, though. People might actually be able to pay back their loans, and then we'd have a happy ending.
The other choice is to keep pretending there isn't a problem that can't be solved by simply hiking taxes (looking at you, Treasury officials) and praying to God that everything holds together before it all hits the fan.

The mathematical Jednadzba shows this. Any economist can believe whatever they want is true, but that's just opinion. My goal isn't to change anyone's mind, I just want to point out that the math itself proves we're still doing this all wrong.

Douglas Reed3 said:I asked a simple question. It couldn't have been any more straightforward than that. I wasn't interested in worker productivity, skill levels, or capital investment. My only question was whether both families actually benefited from the trade they conducted. If there were no profit in it, they certainly wouldn't have made the exchange. One family wouldn't trade if it meant taking a loss. As far as I'm concerned, buying a bushel of apples for... $1.75 I’m passing on them; I wouldn't buy them if I were anyone else. If I eventually decide to pick up a pound of apples, then that pound of apples will be worth more to me than... $1.75 Just like the merchant says... $1.75 It is worth more than his bushel of apples... we both stand to gain from this exchange...

Do you really expect people on this forum to download thousands of pages of study material and hundreds of hours of lectures into your head instantly? Not only that, but after everyone has kindly explained that trading—outside of rare cases like options, futures, or gambling—is essentially a zero-sum game where one person loses just so another can win... you still insist on ignoring everything. You trip up on the very first lesson of supply and demand from an intro economics textbook, yet you claim you're ready to tackle macroeconomics and the Federal Reserve...

The Federal Reserve handles primary money issuance through open market operations involving securities. Secondary issuance occurs via banks using the money multiplier. Imagine the Federal Reserve injects $333 and sets the reserve requirement at 20%. That cash ends up in a JP Morgan Chase account where you deposit $333. JP Morgan Chase takes your $333, $67 and holds them as required reserves, then issues $267 in credit to someone else. In this way, we turn our initial $333 into 1,800... and as banks continue this cycle, we eventually reach $1667 in total money supply.

One must know how to apply mathematics within economics. When you write an identity—an equation—it must actually make sense. If you make an assumption, it must be logical. You cannot simply write banana + egg = car and try to prove that a banana equals a car minus an egg.

So. Somied is still trying to use errors to relativize my mathematical proof. Look, I make mistakes too, but I spent the entire day studying this specific proof and determined it is correct. Maybe my presentation was a bit clumsy, which left some room for people to question the results. That’s why I added a short, 100% accurate derivation in my last post. It’s based on two equations that are objectively true. By adding and subtracting those equations, you get a result that allows you to look at variable influences and draw conclusions about primary issuance and its link to profit. From there, you logically conclude that the federal budget deficit shouldn't be financed through credit because it leads straight to ruin.🙂

Actually, your very first premise, "banana + egg = car," is false, so you can't base anything else on it. In my case, all the initial claims in the mathematical model are true. I simply performed the permitted operations and reduced the unknowns. Check out that GIF I posted earlier. In this mathematical model, I don't involve secondary issuance because you have to build the foundation on solid ground before you upgrade it. Besides, I'm not interested in messing around with monetary policy right now. In this situation, playing around with credit won't save us if we don't realize we are missing 14 years of primary issuance.🙏

I don't really have anything specific to say about this. It’s just one of those things that sits there. I was thinking about it earlier while I was grabbing coffee near Starbucks, just watching the traffic move along, and it occurred to me how much people focus on the wrong details sometimes. Not that anyone is wrong, necessarily. Just a thought. Anyway, nothing more to add here. kaže:
I didn't get the sign wrong on the deficit. I was actually calculating based on the surplus. It’s just a negative deficit. That's how it works.

I proved you can live on a surplus and still actually make a profit. 😁

Look, you changed the example, but honestly, you’re still making that same mistake over and over again. In a closed system, all inputs are equal regarding costs, and you're just not accounting for that properly.

Gross revenue plus tax equals 120 plus 40, which brings you to 160. Just a simple calculation. It works out that way. Simple math.
Total expenses plus what the government picks up equals 130. It’s just 100 plus 30. Simple math. Everything adds up that way.

You’ve still got 30 bucks sitting there that haven't been settled.😕

Take a look at this GIF. It’s all pretty straightforward. Really simple stuff. Everything is easy to follow.🙂

Andrew Booth29 said: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.

That’s all from me.

Well, they got the sign wrong for the deficit. Here is the actual result.

100 + 20 + 30 - 20 = 10 + 120

20 - 20 = 0 Profit + deficit

And my example was fine. Why didn't you notice the deficit was negative there? Attached is an elegant mathematical proof in just five lines.🙂

Andrew Booth29 said: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?

I'm just breaking it down by balancing the total income against the total expenses. Here’s how that looks:

Subject — 1 — 2 — 3 — State — Description of the state item
--------------------------------------------
Income... it’s all just numbers on a screen, really. Three percent, four percent... just bits of tax revenue trickling in from the federal government. It doesn't feel like much when you look at it that way. Just small increments. Steady, I guess. Low-key.
Expenses... just sitting there at 2... 2... 2... then jumping up to 7. Most of that goes toward buying stuff from a specific vendor. Just how things are going.

Total Revenue equals 9.
Total expenses came out to $6. Just six bucks. Totaled it up and that's where I landed. Nothing fancy. Simple enough.
Net profit for the entity equals 3. It's just basic math, really. Nine minus six leaves you with three. Simple enough.

Total revenue plus taxes equals 13. That’s the sum of all expenditures plus what the government takes. It just balances out like that. Simple math. Everything adds up to 13.

The national deficit is basically just math. You take four and subtract seven and you get negative three. It’s pretty straightforward like that. Simple subtraction. That's how the numbers work out.

The math is pretty simple when you look at it. You take the total profit from all private businesses and add that to the state deficit. It’s basically just zero. Everything balances out in the end. Simple as that.

Is this okay? It’s basically an isolated system. The only real factor at play here is the budget deficit being driven by overspending relative to tax revenue.

Andrew Booth29 said: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.

So, if you're deciding right now that your equation is just derived... well, then that's that. It’s a thing. It's established. You've reached that point where the math just sits there. It’s done. I guess everything follows from there. Everything. S That’s right. And that's my take on it too. A If you're wrong, you’re going to have to retake that math exam. Seriously. My logic holds true for every single value of the "profit sum"—it always equals the "budget deficit." Your version only works if the total profit sum hits exactly zero. Or, to put it another way, it only applies when there isn't a budget deficit or a surplus at all. It just doesn't work otherwise.

A Total expenses for all entities plus government spending equals the total amount of taxes collected plus total gross revenue. It’s just how the math works out. Everything balances.

S Total costs plus profit plus what the government takes minus two times that profit equals the total tax amount plus total revenue. It just works out that way. Simple math. Everything balances if you look at it right.

Equations. Just equations. It’s funny how people get worked up about them. Some see a problem, some see a puzzle. I just see lines on a page. You look at one variable, then another, and suddenly you're trying to balance everything out. It feels like life sometimes, honestly. Trying to make sure both sides match up perfectly. But math doesn't care about your feelings. It just exists. One side equals the other. Simple, really. Or not simple. Depends on how much coffee you've had. I don't have any text to work with yet. Please provide the posts you want me to rewrite, and I will get to work immediately. It’s just basic math. In a closed system, the total revenue—counting both individuals and the government—has to equal the total expenditure. There's no way around it. It’s an absolute certainty. One person's income is simply another person's expense. It works that way. You can't argue with the numbers.

I don't really see how you can explain an equation like that. It just doesn't work. S Unless we're looking at a total profit of zero.
Sure, a deficit can happen. It just happens. Sometimes you look at the numbers and they aren't there. It’s just one of those things that occurs. kProfit. Any amount at all. I don't know what you need me to work on yet. Just send over the posts whenever you're ready. I'll be here. It always comes out to a zero deficit because the profit is zero too. Based on what you’re saying, it would imply that if you divided profit by deficit, you could just pick any number you wanted—like 2 or whatever. That doesn't work. It's mathematically broken. Zero divided by zero is undefined. You can't just assign a specific value to it at any point.🙏

Douglas Reed3 said:The question was incredibly straightforward. There were four possible answers: Family A, Family B, nobody, or everyone. I never asked about pricing, climate, or labor skills. Let's just ask the families who walked away ahead.

Family A: That trade was amazing. This corn will serve us well, and we got it for only 50 chickens!

Family B: It went great! Now we can finally eat meat since we have more corn than we know what to do with!

What do you say to that? These two silly families both think they profited from the trade, even though we all know from your logic that one family had to lose. Strange families indeed...

This whole debate is just beating a dead horse. It would be like me trying to argue medical science without knowing a single thing about medicine, only for doctors to tell me I'm talking nonsense and should go read a textbook, while I insist I'll reach the answer through pure logic and math...

Well, you wanted to relativize values. That’s just blurring the logic. So I took that direction. You can compare two products based on worker productivity. But even then, you still have to account for worker expertise and the capital tied up in production. I could have added all that too, but I left you some room to continue blurring things.

Regarding expertise. How can anyone claim to be an expert if they can't even convey their knowledge in a basic way to someone else? Secondly. Do you really think you'll be able to fix a remote control just by studying the basics of electrical engineering, digital integrated circuits, microprocessors, electrochemical power sources, and electromaterial technology? You'd need similar literature if you wanted to fix a radio, a blender, or anything else. Basically, you need to be an expert in a forest of literature—theory—combined with a certain amount of practice—before you can tell a layman what to do to actually solve a problem.

The topic is actually quite serious. Money is one of the pillars of capitalism and is central to economic events. If we don't understand where new money comes from and why, how can we ever fully grasp other economic laws? Telling someone they have no clue without providing a real answer is pretty unprofessional.

Math is an exact science, and economics uses math as a tool. Just like physics. In physics, you can even prove that if you know an object's velocity, there's a specific uncertainty in its position, and vice versa. You know, the Uncertainty Principle. However, if you want to say I have no idea or that something isn't right, then disprove the mathematical claims like Somied did. Okay, I messed up a little because I didn't spot his error immediately. And it was obvious. Because once you plugged in the wrong solution, the equations just looked wrong.

Besides, I limited the scope to proving the necessity of money inflow and, if no one refutes the evidence with more accurate equations, proving that the current moves in the US are leading the country toward ruin. Or maybe we disagree on that too. Perhaps this situation and whatever follows in the coming years is exactly what we need.

Look, people have been arguing for 18 months now about whether or not to devalue the currency. The answer is clearly visible in my evidence. There would be money, and I wouldn't devalue, if everyone were actually producing things (working instead of just importing and trading) and if precise, earmarked issuance of dollars occurred through budget deficits specifically for the state's cumulative profit. And of course, if there wasn't all this massive profit created by sheer greed for money. You see new evidence of that greed every single week. And then people act surprised at what others come up with to grab cash without doing any actual work.🙏

Andrew Booth29 said: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.

So, regarding that solution you floated about the budget deficit... basically, you're saying a deficit is just negative profit. That’s how you see it. It's a simple equation, I guess. Profit minus everything else. Or rather, when things go south, you end up with a deficit. It's a direct mathematical link. Just a flat assertion. Simple enough.

It won't work if you try to make the total revenue equal the sum of all transaction costs. It just doesn't add up that way.

A Total revenue plus total taxes collected equals total expenses plus the state’s cost. It's just basic math. Everything flows in one direction. You add up all the money coming in from everyone, then you add the tax haul, and that has to balance out against what everything costs to run, including whatever the government spends on its own overhead. Simple equation. Just numbers on a ledger.

It’s pretty obvious when you look at:

I don't know. It feels like things are just shifting. Everything is always moving, isn't it? People talk about change like it's this big, dramatic event, but mostly it's just quiet. Just small pieces sliding around. I was thinking about that the other day while watching the news. It's all very constant. Very steady in its instability. Anyway. That's just how it seems to me. kaže:
Total costs plus profit plus what the government takes minus twice the profit equals the total tax amount plus total revenue. It just balances out that way. Simple math.

The difference between equations is...

Profit equals zero. That’s just how it stands. It’s a flatline. No gain, no loss, nothing moving on the ledger. Just sitting there. Zero.

It’s been proven in the end. That whole thing only works as a solution when the profit hits zero.

A The equation is just the middle step of my proof. Once you plug in the assumed result, everything lines up perfectly. It’s logically sound. At the end of the day, what one person calls revenue, someone else just sees as an expense. That's just how it works.🙂

It’s kind of a bummer. When you finally get proof of something, you realize it all just comes down to staring at math equations. That's really it. Just equations.

To make the equation balance out properly. I don't have any text to work with yet. Please provide the posts you want me to rewrite. The profit has to be adjusted to match the deficit. It’s just how it works. Everything will balance out because that's what the math dictates. Simple as that. AThe government can decide to run a bigger deficit if they want, but there's a catch. If that extra spending doesn't actually result in enough growth to cover the gap, you end up looking at a weaker dollar. You basically end up printing money that isn't backed by real wages or actual economic productivity. It’s a simple thing, really. In terms of currency parity, it just triggers inflation. That's how it works.

Proof. I think we should talk about this more. It feels like things are moving too fast lately. Everyone is rushing. I don't know. Sometimes you just need to sit back and look at the big picture. It’s important to stay grounded. People get carried away with the noise. They shouldn't. It's better to be steady. Just an observation. The sum of all profits equals the budget deficit. It implies that...
If everyone’s goal is to ensure that everyone turns a profit, then every single individual profit stays above zero. If you take all those positive profits and add them up, the total amount of money available to actually be realized in cash depends entirely on whether the federal budget deficit is large enough to cover it. It's just math, really.

A budget surplus can happen when the government collects more in taxes than it actually spends. It basically results in an overall negative profit margin for the state. That leftover tax money is just proof that those funds were pulled right out of the system during that specific period.

It’s honestly just a bit depressing, looking at how much primary money is being pumped in just to cover up those planned deficits. It feels like we're constantly trying to fill a hole that was dug on purpose.

It’s pretty obvious that if you’re going to take out loans to cover a deficit, you eventually need the budget to swing back into a surplus—and a bigger one at that, just to account for all those interest payments. Looking at the data, it follows that this would mean...

1. You have to pull out more cash than what was actually put in through a deficit. Basically, you end up running a budget surplus for several years straight just to compensate, which only makes the whole imbalance even worse. It's a mess.

2. It seems pretty foolish for a government to go out and take on debt when they could just use a primary issuance instead. If you do an issuance like that, it’s actually backed by newly created value—basically, actual profit. You have this new value standing right behind the money. It increases the amount of liquidity in circulation, which then allows for real savings. And once you have those savings, you can actually use them to build up the nation's prosperity.

I’m just going to say it again. The government actually has the option to trim the deficit. If they do that, they can stabilize the exchange rate between our new currency and everything else out there, both domestic and foreign. Sure, making those kinds of moves creates some friction in the system. It’s never perfect. But honestly, I’d much rather deal with a series of small, manageable bumps in the road than the massive, sudden cliff we seem to be heading toward right now.🙂

Andrew Booth29 said: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.

The main point I'm making is that you can prove there's no need for a deficit—provided that deficit is funded by primary issuance—that matches the actual value of the profit. Basically, the government can look at how much profit is being generated, realize it's overvalued, and then scale the deficit back down to a realistic level. Naturally, if there's a money deficit caused by excessive profits, some entities might end up losing out or missing out on those profits entirely. In my math model, I'm assuming these entities build their profits in a way that prevents their money from being devalued against currency parity. So, there's a lack of greed for profit here. If people get too greedy for profit, it just ends up wiping out the less profitable players.🙂

Andrew Booth29 said:Heh...

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

Cancel out the total tax revenue from both sides:

2 * profit = - deficit

😂

Eq1 and Eq2 are only true in one single scenario, which is when "Total Profit" = 0

If you subtract Eq2 from Eq1, you get:

"Total Profit" + "Total Profit" = 0

which simplifies to: "total profit" = 0

So, basically, every substitution that differs from my result leads to the exact same solution: "total profit" = 0.

Douglas Reed3 said:The Rockefellers raise chickens
Family B produces corn

The Rockefellers sold 50 chickens to Family B for 1 ton of corn. Which family turned a profit?

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.

Andrew Booth29 said: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.

Equation 1 is:

"Total costs of all entities" + "Total profits of all entities" + "Government spending" + "Budget deficit" = "Total taxes collected" + "Total gross income"

If we assume that "Deficit" = "Total profits" should hold true and plug that into equation 1, we get:

A "Total costs of all entities" + "Government spending" = "Total taxes collected" + "Total gross income"

And by substituting into A that "Total gross income" - "Total costs of all entities" = "Total profits"

We get, by canceling out "Total costs of all entities" from both sides:

B "Government spending" = "Total taxes collected" + "Total profits"

From equation 2, "Government spending" + "Budget deficit" = "Total taxes collected"

it follows that:

C "Government spending" = "Total taxes collected" - "Budget deficit"

By equating B=C through "Government spending"

D "Total taxes collected" + "Total profits" = "Total taxes collected" - "Budget deficit"

Canceling out "Total taxes collected" on the left and right gives us:

E "Total profits" = -"Budget deficit"

Which is exactly what we assumed at the start. So the assumption was sound and solving the equations further doesn't contradict the premise.

Here is the proof for equation 5.

Plugging 0 into 5 for "Budget deficit" confirms equation 4 as well.

That explains why we always have a planned budget deficit. Without it, there is no way to achieve profit at the national level. In aggregate, I mean.

Is there anything else that needs proving with math?

The administration has only done half the job regarding the budget deficit. They should have handled the second half via primary issuance in the same amount without relying on foreign loans.

Naturally, if entrepreneurs try to chase higher percentage profits than in other countries, then the value of the currency will drop relative to other currencies. Basically, someone would need to monitor all instances of excess profit. That would be possible by implementing a social security number system to track all financial transactions between entities. It feels a bit like a Big Brother scenario. Then it would be easy to see the realized profit margin relative to revenue. Which would be the goal of society—controlling unnecessary price gouging and preventing inflation.🙂

Andrew Booth29 said:2. You’re wrong about this, simply because:
government spending = total tax revenue + budget deficit

1. Your logic in point 2 is actually identical to this:

"Total expenditure of all entities" + "Total profit of all entities" + "Government spending" + "Budget deficit" = "Total taxes collected" + "Total gross income"

Which simplifies to:
"Total expenditure of all entities" + "Total profit of all entities" = "Total gross income"

So, if you plug that back into my first equation, you get:

"Total gross income" + "Government spending" + "Budget deficit" = "Total taxes collected" + "Total gross income"

Now—and try to follow me here—cancel out "Total gross income" from both sides:

"Government spending" + "Budget deficit" = "Total taxes collected"

Which leads us back to 7:

"Government spending" > -"Budget deficit"

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.

The current money supply isn't the point. The formula shows how much new money should be appropriately issued during a single year and why we shouldn't just rely on external loans to cover it.
. And according to the formula, that equals the entire nation's profit for that year.

The specific details about what goes into economic analyses aren't really my field. Honestly, the value of money drops, so that should probably be compensated for somehow, or maybe that drop is just the result of over-issuing currency?! The inflation we see in America might partly be driven by the inflation of the dollar, since everything is tied together within certain exchange limits regulated by the Federal Reserve.

I believe the derived formula is correct. In a real-world economy, maybe it needs a little tweaking. But how do you fix fourteen years of having no primary issuance? That's a question for the actual economists. The issue was that things were being obscured by bank loans, which basically introduced new money through secondary issuance.🙂

What’s more important is understanding that these formulas apply to every country, and generally to the whole World Cup. Even powerful banks (and the Federal Reserve) can obscure the problem for years, forcing the economy into a state of debt slavery.

If I understand correctly, the Federal Reserve provides credit to the US government to cover the deficit. Based on my proof, it looks like a portion of that deficit should actually be covered by primary issuance. Specifically, the part relating to the US budget. As for everyone else, it's not their fault if people don't realize that a budget deficit shouldn't be covered by any kind of loan.

And one last question. Why hasn't a single economic expert in America created a mathematical model and used equations to calculate the necessary primary issuance?
If anyone has data from previous years (regarding realized profits), it would be interesting to calculate how much money is lacking in circulation. You have to account for the fact that my formulas add up all the individual profits of all people. Since we can't be sure everyone keeps their savings in banks, the result won't be perfectly accurate—it will likely be lower.

And just as an aside, the evidence shows that, for example, charging twice for tunnel maintenance effectively devalues the dollar. Basically, every unrealistic profit in the system devalues the currency because it has to be replaced by a budget deficit. More precisely, having more dollars in the total sum of profits for the exact same volume of work means the dollar has less value.

The lack of any actual mathematical foundation behind these claims prompted me to work out the math for the balance of money within a nation. I'll publish the full derivation once I find the time in a PDF booklet titled "The Financial System and the Source of Money for Charlatans".

Jedanadžba is:

1. "Sum of all entity costs" + "Sum of all entity profits" + "government expenditure" + "budget deficit" = "Sum of all taxes collected" + "Sum of all gross revenues"

Every business entity has its own expense side, its profit (+/-), and its revenue. A budget deficit carries a negative balance!!

When I say business entities, I am including everyone—active workers and retirees, corporations, the government apparatus: the military, police, etc. By "the state," I mean strictly the service that collects taxes and spends the budget, excluding people and physical assets—see equation 2!

- Supporting equations are:

2. "Government expenditure" + "budget deficit" = "Sum of all taxes collected"

A budget deficit has a negative balance!!

3. "Cost" + "Profit" = "Revenue" — for every single entity

- Derived equations:

If there is no budget deficit, it follows that:

4. "Sum of all entity profits" = 0

If there is a budget deficit, it follows that:

5. "Sum of all entity profits" = -"Budget deficit"

The necessary new money, i.e., the deficit (negative budget residue) from eq. 1, is:

6. "Budget deficit" = "Sum of all taxes collected" + "Sum of all gross revenues" - "Sum of all entity costs" + "Sum of all entity profits" + "Government expenditure"

There also needs to be a condition where:

7. "Government expenditure" > -"Budget deficit"

That isn't hard to achieve because it just means you need to collect taxes.

This mathematically proves that a state without a budget deficit fails to create the prerequisites for all entities to achieve profit; essentially, some entities make a profit while others take a loss. If you accumulate the same sign of operations over several years, the losers fail first, then the less profitable ones (since someone always has to lose), and eventually, all the money ends up with one or a few entities in the most profitable sectors.

This proves that the state shouldn't finance a budget deficit through credit (this will spark heavy debate) but through primary issuance. It is impossible to take out a loan to pay out profits because you can only repay a loan using new profit, for which you would then have to take out another loan. It’s a perpetual motion machine that ultimately creates debt slavery.

These equations are derived based on the conditions of an isolated system without secondary credit issuance by banks. Because of this, any foreign inflows or outflows of money are omitted. They could be added to the formulas, but they don't change the essence. Even if the state has a surplus or deficit relative to the outside world, it should still utilize primary issuance according to formula 6.

Through these mathematical equations, the flawed policies of the state and the
Federal Reserve
are proven wrong.
All equations are derived based on the logical assumption that in an isolated system:

8. "Sum of all revenues" = "Sum of all costs." In other words, what is revenue to one is a cost to another. This includes everyone, even the state. Secondary credit issuance does not exist.

I'll have quite a bit of work over the next few days, so I'll be able to write up the PDF booklet with the more detailed derivation then.

Thanks again to Somied for giving me a reason to mathematically prove my logical reasoning. 👍

Andrew Booth29 said: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.

Was it really that stupid to use merchants as an example? Does that mean economic science doesn't apply to them? Noted. Thanks for the answer.

I'm not going to go around replying to everyone individually. Honestly, half of these counterarguments aren't even backed by anything. It's just people talking. I’ve been sitting here thinking through the logic, and I’ve pretty much mapped it out. It's simple deduction, really. If you have a fixed amount of capital in the system, then for one side to pull in a constant profit, there has to be an equal loss on the other side. It’s just how the math works out. Everything balances. It can be proven mathematically. Here's an example.

If managing ten different asset classes feels like too much, just try scaling it down to two. You’ll quickly realize that as soon as one group starts turning a profit, it somehow creates a deficit for the other. It's just how the math works out. Here is an example where I haven't even touched the actual value of the inventory.
Say, let's look at an example. Imagine Family A owns a painting that has some kind of value. They end up selling it over to Family B for $X. Now, if Family B decides down the road that they want to sell that same painting back to Family A, they’ve basically got three different ways to handle it:

The B family just sold a painting for Y dollars more than they paid. They’re walking away with a profit of Y-X. Meanwhile, the A family is sitting there with a deficit of that same amount.
Family B is offloading that painting for Y bucks less than they paid. It’s a total loss of X-Y for them. Meanwhile, Family A is sitting pretty with a profit of that same amount.
The B family is selling that painting for X bucks, and honestly, nobody comes out ahead here. Not a single family sees any actual profit from the deal.

All the other combinations within that $n$ family basically yield similar results, though there's just a massive amount of them to sort through. The net balance of trade sits at zero. Gross revenue reached unknown.

Look, let's just cut the chatter. If you've got a point to make, prove it with actual math. Show the work.

Citing economics textbooks isn't going to change the math. It doesn't work that way. Economics is built on top of mathematics, not the other way around. Simple as that.🙂

I'm done. I’m not going to waste any more energy debating points that just don't hold up to basic logic or math. It's just not worth it.

It’s just like those endless debates where people argue over whether the left side of a math equation actually equals the right side.🙏

So, following that logic... if you're out there generating steady profits and just sitting on that cash—not reinvesting it into goods or anything like that—while the total money supply stays exactly the same, you're basically pulling liquidity right out of the system. It's inevitable. You end up with less money circulating in the economy.

Even if that point above sounds a bit ridiculous, it’s actually true, and there isn't much room for debate. There are real-world consequences to it, though. It basically means all our savings—the money we're sitting on and watching grow, even if we're spending some of it—is effectively shrinking the total amount of money in circulation. Sure, you can move money through a bank, but eventually, those loans have to be paid back. You can prove it mathematically. It just works that way.

If you don't believe me, just look at two people starting with the exact same amount of cash. Let them trade, buy, and sell however they want. The math doesn't lie, and the results will prove my point every single time. If one person manages to pull a steady financial profit through trading year after year, the other person is absolutely going to run out of money. It’s inevitable. Any poker player worth their salt knows how this works. Once you hit zero, the game is over. That's bankruptcy. Simple as that.
When you’re running the numbers, you really have to use goods and currency that don't shift in value over time. It's a whole other conversation, honestly. There are just way too many variables involved, and if you aren't careful, you can end up using a bunch of words that just muddy the actual logic of it all.

Nobody is really trying to wrap their head around the pure logic here, mostly because they can't stomach the fact that the result is so bad. Everyone seems to think that the chaos of economic shifts can somehow override basic math. But economics, as a science, has to hold up regardless of the players involved, so all that noise regarding trade and currency exchange can be completely factored out of the equation I'm looking at. It’s a bitter pill to swallow, believe me, I know. Also, just so we're clear, the Federal Reserve has maintained a system like this since 1994—though there might be a slight margin of error in my thinking since I'm not an economist and I don't know exactly where the interest on deposited funds is paid from, whether it's new money or the Fed's reserves. If it’s true that the primary issuance of the dollar was skipped over during the last 15 years, then my conclusions explain the cash shortage perfectly. It becomes especially obvious when you have to pay back loans and pull money from secondary issuances. Things were helped along by credit lines, but those have to be repaid too, which means pulling dollars back out of circulation. I forgot to mention that inflation has also devalued the currency, which further shrinks the real value of the dollars currently in circulation. If my logical deductions are correct, then the implications for the entire planet—the ones I mentioned when I first started this thread—are massive. First, we need to agree that this heavily padded argument is logically sound, otherwise we're just going to end up circling back to the beginning again.

Look, don't go nitpicking whether every single one of my other points is 100% accurate. I'm not an economist by trade. I just look at things through a purely logical and mathematical lens. I'm not trying to lecture anyone on the laws of supply and demand for goods or currency—that’s a whole different field. My only interest was pointing out the logical outcome of trying to maintain a constant money supply when there's persistent profit being generated, and what the fallout looks like. It honestly surprises me how certain everyone seems that I'm wrong, especially since nobody is actually attempting to prove their claims mathematically. It feels more like we're debating a religion than an exact science.

Anyway, greetings to everyone, and thanks for the effort in defending your positions.

I'm not going to bother responding to posts that aren't backed by math using a simple two-subject model. It would just be going in circles. As soon as I get a response from someone over at the University of Chicago, I'll share a summary with you all. And if anyone wants the full thing, just let me know.

All the best to everyone in 2010.🙂

Andrew Booth29 said: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. 😉

The math doesn't add up:

Look at two people. No matter how much they sell to one another, only one person ends up with a profit at the end of the year! Sure, they generated revenue, but one side is running a deficit while the other is running a surplus (in terms of cash on hand).🙂

Andrew Booth29 said:As far as running a simulation goes, I honestly don't see the point in wasting my time with it... You’ve essentially backed yourself into a logical corner here—if one single family holds every cent in existence, then that money ceases to function as currency for anyone else (because they'd have to be tapping into some other source of value entirely). All they could really do with that hoard is use it as toilet paper—and even then, only if we're talking about physical cash. They wouldn't be able to trade goods or services with anyone else, which means they'd likely starve to death pretty quickly, or at the very least, end up living in absolute, crushing poverty.

The simulation I tried to run to figure out what happens to the actual amount of money was based on something with intrinsic value—like a gold coin. The whole issue stems from a limited supply of currency, regardless of how much total money exists. I believe that sooner or later, a more productive family or one that holds a monopoly on a specific service will start hoarding wealth. Because of the shortage of cash, the others—even if they have the drive and the work ethic—won't be able to sell their products or services to anyone except the person who actually has the money (assuming we stick to cash exchanges). As long as the amount of money in circulation stays fixed over time, wealth accumulates in whichever family generates the highest profit. Basically, the biggest gap between earnings and expenses. Like some frugal, hardworking family, for example. But again, the moment a family turns a profit in a society with a finite amount of money, it means someone else has to take a loss. The system would practically function if every family's annual profit were exactly zero gold coins. That's a utopian model, though; it isn't capitalist-oriented and just wouldn't work in reality.

So, the main problem remains: in an isolated system with a finite amount of money, creating profit is the issue. It pulls money away from non-profitable entities, and as you mentioned, they are left with nothing but bartering. In this isolated environment with limited cash, it's impossible for everyone to be successful (profitable). For everyone to be profitable, there has to be an influx of new money to fill the profit quotas of all the families.

It’s just pure logic:

1. If someone is earning, someone else—or several others—is losing.

2. If someone consistently turns a profit, as they hoard money, the rest of the community is left without liquidity—there’s no sense in borrowing someone else's profit when they have no way to pay it back. By accumulating profit, that wealthy family is effectively shrinking the available money supply in the long run, making the repayment of long-term loans questionable.

These two things are undeniable for an isolated community with a fixed money supply. I'd ask anyone following this to confirm these points or refute them with opposing arguments.

If this is true, what is the real way out? Implementing a 100% tax on profits or issuing new currency. The question is how to introduce money into an isolated society without destabilizing its value. We are still talking about gold coins here.

As you can see, it’s easy to set up the simulation logically and see where the result leads. It's frustrating because I don't see a good way out of this situation. That's why I started this thread. The problem is heavy, and we really need a solution for it.

The simulation didn't prove that new value requires new money, but it did show logically that with a limited money supply, while some people are making a profit, others are suffering a loss. So, if the solution is injecting new money, then we really need to think carefully about how to do that in a fair, honest way.