Maria Thomas48 said: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.
Look, let me put it this way. If I’m hungry and have nothing to eat, then I buy food from someone for 10 bucks, am I "impoverished"? At that exact moment, sure, I have less cash—but in terms of value, absolutely not. In fact, I actually gained more than I lost because I'm fed, and the vendor got paid; we both "won." Don't conflate currency with value.
And like Sommer mentioned earlier, if your hypothetical scenario actually played out and all the wealth concentrated into a single family, the rest of us would just keep living through bartering or by "inventing" our own local currency. That wealthy family would be sitting on millions of dollars that wouldn't mean a damn thing in a newly formed market. If I happened to find a few stray bills on the ground, they wouldn't hold any value to me anymore...
At the end of the day, we were all once intense buyers and sellers in a similar micro-market—probably back in high school or college. Almost all the money was in our parents' hands (the wealthy family), while we had very little to spend on food, so we mostly traded things among ourselves via barter: 🙂 You give me five movies on DVD, I give you these ten music CDs, and so on. 😁
Regardless, I don't have an issue with you trying to simulate something to solve a problem—that’s commendable, even if you lack the technical depth to pull it off. However, the real issue is that you won't fix this problem with any simulation—especially not one based on "ideal and isolated" conditions—because you know perfectly well those conditions don't exist in the real world.