The Financial System and Money Supply

You guys are getting completely off track here. It really doesn't matter who does what or whether they're doing it right or wrong. That’s all personal stuff.

We need to reach an agreement on permanent ways to generate profit. The possible sources are:

1 - The community budget deficit
2 - Other entities (domestic investors and consumers)
3 - Banks during periods of credit expansion
4 - Foreign investors
5 - The trade balance plus foreign subsidies

Does anyone have anything constructive to add? In your opinion, what would be a permanent indirect source of profit (in actual cash terms)? Like, a source that won't just burn through itself over time, and what is it currently? Please include some reasoning if you can.

All this talk about business experiences and "this happened to me" is irrelevant. That's just a matter of entrepreneurial freedom and adapting to market conditions. It isn't important for this specific analysis. This discussion is about the prerequisite that allows any business to actually exist and grow or evolve into something else.

Everyone keeps talking about saving, accumulation, smart investing, balanced federal budgets, and so on. But the prerequisite for saving is being able to turn a profit somewhere. So, I want to hear it: where can one profit permanently and indirectly? Can anyone provide an argued case?

Also, if the system doesn't allow for profit within the community, then that community won't be able to pay back its loans. Just make sure that profit isn't indirectly tied to new debt. If that happens, you can't repay the loans and the debt just keeps climbing. (It reminds me of that period when the government went all out on massive infrastructure projects—like huge highway expansions—and GDP shot up. Sales tax was rolling in. Wages were rising. People felt wealthy. They borrowed heavily. Mortgage rates shifted. Every small developer was building condos. It looked like heaven on earth. But even back then, it was clear to me that GDP growth driven by pure investment creates an illusion of prosperity; the real situation always surfaces once the credit expansion ends.)

Best,

http://www.imf.org/external/pubs/ft/...10/spn1003.pdf

Check this out. Read it and maybe the world will finally make sense to you. 🙂

brightlynx11 said:http://www.imf.org/external/pubs/ft/...10/spn1003.pdf

Check this out. Read it and maybe the world will finally make sense to you. 🙂

The whole thing is really just a lecture on basic principles. It’s like telling workers, "hey, if you just make high-quality, durable goods, you'll be the best in the business." Simple enough.

And the text itself explicitly states:

A caveat before we start: the paper focuses on general principles.

All those theories... economists already know them all. But they don't actually lead to anything. I mean, think about it. How is it that no other nation—except maybe China, though I think that's temporary—has managed to pull it off? And even with China, we know how they did it, but we can't just replicate that model everywhere else.

The real key is identifying a sustainable way for a society to generate profit, and then proving that it can work long-term for every nation simultaneously. If a community doesn't have a reliable engine for profit, a crisis is inevitable. You see the proof in infrastructure spending.

Gregory Williams7 said:But then we run straight into another issue 🙂 because you're simply performing the exact same action, just in reverse.
The end result? An artificial spike in gold prices relative to the dollar—which, given the current trajectory, seems inevitable.

Right now, we're looking at an unnatural state caused by paper gold manipulation, leaving actual gold significantly undervalued. I don't see why one shouldn't have the right to protect themselves from the very things > is warning about. Gold has one key characteristic: you can't just print more of it overnight. Physical gold can't have a "wrong price," which makes it a far more honest medium of exchange. A new monetary system doesn't necessarily have to be gold-backed, but it does need discipline. Of course, that’s exactly what the big bankers hate...

Maria Thomas48 said:I don't want to just parrot what you wrote Robert Vaughn10, but it feels like you're sidestepping the question about where a community actually finds its long-term profit drivers.

That’s why I brought it up. Fine. Let's just drop the potential solution for a second and look at the facts. What happens? We can't even reach an agreement on where new capital enters the ecosystem. And we have to realize that any influx of new money—whether it's through credit, exports, foreign investment, or international grants—is basically the indirect engine for profit within a community.

We really need to get on the same page about that first.

It seemed obvious to me that the only way to fund profit is by creating actual value, so I didn't bother replying.
And that is the path we need to follow here, using a combination of strategies. Saving, investing those savings, and on the other side of the scale, taking on dollar-denominated debt to buy gold. Saving leads to a drop in GDP, but that is an absolute necessity if you want a proper restructuring. Anything else is just wishful thinking.
So, the direct answer to your question is one word: saving. Not some dark cloud theory about running a $7 billion deficit in the current account every month.
My ancestors might have been considered stingy by modern standards, but they lived in a surplus and nobody could touch them.
The only way to generate profit is through the rule of law, market relations, and creating real value. All these conditions must be met if success is the goal.
Printing money isn't a solution, unless it triggers economic growth—though I fail to see why we would even bother printing more money in the first place.
Prices would eventually drop, find a new equilibrium, and things would stabilize again.
Based on your spreadsheet, points 2, 4, and 5 are the ones to watch.
Point 1 is out of the question, and point 3 is something we'd prefer to minimize since it carries high interest rates.
The obvious answer is that you must save and consolidate before you can expand. It requires discipline and sacrifice, but the long-term payoff is better because you actually respect what you've earned. What interests me is whether it’s possible to build a permanently stable system. As you noted, growth in China could be temporary if they end up consuming more than they produce, and that ratio will likely shift once exports aren't enough to carry them.
But then again, we wouldn't have anything to talk about on this forum...

Robert Vaughn10 said:It seemed obvious to me that the only way to fund profit is by creating actual value, so I didn't bother replying.
And that is the path we need to follow here, using a combination of strategies. Saving, investing those savings, and on the other side of the scale, taking on dollar-denominated debt to buy gold. Saving leads to a drop in GDP, but that is an absolute necessity if you want a proper restructuring. Anything else is just wishful thinking.
So, the direct answer to your question is one word: saving. Not some dark cloud theory about running a $7 billion deficit in the current account every month.
My ancestors might have been considered stingy by modern standards, but they lived in a surplus and nobody could touch them.
The only way to generate profit is through the rule of law, market relations, and creating real value. All these conditions must be met if success is the goal.
Printing money isn't a solution, unless it triggers economic growth—though I fail to see why we would even bother printing more money in the first place.
Prices would eventually drop, find a new equilibrium, and things would stabilize again.
Based on your spreadsheet, points 2, 4, and 5 are the ones to watch.
Point 1 is out of the question, and point 3 is something we'd prefer to minimize since it carries high interest rates.
The obvious answer is that you must save and consolidate before you can expand. It requires discipline and sacrifice, but the long-term payoff is better because you actually respect what you've earned. What interests me is whether it’s possible to build a permanently stable system. As you noted, growth in China could be temporary if they end up consuming more than they produce, and that ratio will likely shift once exports aren't enough to carry them.
But then again, we wouldn't have anything to talk about on this forum...

If you meant doing that by mining gold, then yeah, you're on the right track. Otherwise, banks don't care about new value unless it gets converted into cash. And how are you going to turn new value into new money if you only have the existing money? You can only pull that off by digging up gold. Then the Federal Reserve will just issue new dollars immediately.

And you also haven't proven how you’ll manage to make a permanent monetary profit through these methods in total.

2 - Other entities (domestic investors and consumers)
4 - Foreign investors
5 - The gap between exports and imports plus foreign subsidies

That would mean one of those sources is what injects the money used for profit. Exports could be one, but it isn't a solution for 99% of countries; we see that in practice. Gregory Williams feels the same way. It's hard to rely on steady foreign investment to provide profit for an entire country. And domestic money supplies—which are basically someone else's old savings being spent, causing those subjects to take a monetary loss during that period—aren't a permanent source of money for profit. Maybe for a little while, but not permanently. In reality, in total, the community doesn't see a monetary profit when the profit comes from category 2. There isn't any new money there, just moving things from one hand to a profiteer's hand. When someone profits permanently, it's known that others are taking a monetary loss to cover it. The sum is zero. Mathematical equations prove this. I could show you an example of how it works. That's why a crisis eventually has to develop.

Anyway, I've already said all this, but nobody seems to get the point. There's an old saying: "You can't have your cake and eat it too." In a country without an inflow of new money, the saying goes: "You can't have a monetary profit unless someone else is taking a massive loss."

Maria Thomas48, I unfortunately don't follow your logic.
Look, you have to save money. Is it really that hard to grasp the concept that you need to produce more than you consume? There isn't another way. I can't generate profit for someone who lives like that. If a person runs such a massive deficit that they're hemorrhaging $1 billion in interest annually, there’s nothing I can do until they decide to help themselves.
If you need to cut the power, cut it. If you need to live on bread and milk to get by, do it. If you need to hold onto last year's textbooks to stay afloat, then do that—whatever it takes to fix your finances.
A deficit is simply a deficit; the only cure is a surplus.
If you won't accept that reality, then there are no solutions.
Sustainable profit requires constant work and, more importantly, a surplus.
My ancestors are proof enough of that for me.
And that serves as my evidence for point two, which is more than sufficient.
All the trouble started the moment people began spending more than they earned. That is the root of the problem, and that is how it must be solved. Period.

Robert Vaughn10 said:Maria Thomas48, I unfortunately don't follow your logic.
Look, you have to save money. Is it really that hard to grasp the concept that you need to produce more than you consume? There isn't another way. I can't generate profit for someone who lives like that. If a person runs such a massive deficit that they're hemorrhaging $1 billion in interest annually, there’s nothing I can do until they decide to help themselves.
If you need to cut the power, cut it. If you need to live on bread and milk to get by, do it. If you need to hold onto last year's textbooks to stay afloat, then do that—whatever it takes to fix your finances.
A deficit is simply a deficit; the only cure is a surplus.
If you won't accept that reality, then there are no solutions.
Sustainable profit requires constant work and, more importantly, a surplus.
My ancestors are proof enough of that for me.
And that serves as my evidence for point two, which is more than sufficient.
All the trouble started the moment people began spending more than they earned. That is the root of the problem, and that is how it must be solved. Period.

Did I ever actually say any of that stuff you're bringing up shouldn't be done? No. I didn't.

You can't really mix business with family. A household builds its income and savings based on outside earnings. It’s just understood that those funds aren't coming from anywhere else—they come from hard work and a decent paycheck.

If you project that onto the whole country, then it implies we really ought to be focused on exports. But if that's the case, it also means we don't actually need our own currency. It’s like when you’re dealing with family—you end up using someone else's money instead of your own. So, what’s even the point of having our own money then? That's the first question.

The other issue is pretty obvious. You can't have every single country hitting those kinds of export numbers at the same time. It just doesn't work like that. At the end of the day, someone's massive export has to be someone else's import. It's basic math.

It’s the same issue within any community made up of families. It just isn't possible for every single family—or every individual entity—to maintain a positive balance all at once. If certain families are constantly pulling ahead with a surplus, then others are inevitably left in the red. It's basic math. One side wins, the other loses.

Look, you have a country that acts as the legal issuer of currency. Did we basically legislate ourselves out of that ability? Think about a medieval kingdom that doesn't mint its own coins, but instead just borrows them from others in ever-increasing amounts based on population and demand. When it comes time to pay those loans back with interest, they’re stuck—they can only cover it by taking out even bigger loans because the mint is effectively shuttered. That’s the core issue right there. Imagine if the population jumps by 30%. You’re going to need more money to handle all that extra circulation. That whole theory about speeding up the velocity of money just doesn't hold water; it's a trick concept that fails in practice. If it actually worked, we could run the entire economy on a single dollar. But where would that dollar come from? The mint isn't producing anything. It’s impossible, plain and simple. You can see it clearly. Even if everyone works harder, they're all chasing the exact same mass of money, which theoretically should increase the value of the coins. That’s great for the people who managed to save up a bunch of cash beforehand. In a perfect world, that would mean products should get cheaper. But I honestly don't know how long that deflationary trend can actually last. Besides, it ends up feeling like the harder you work, the less you actually earn. It’s just not an incentive at all.

I guess I’m drifting a bit from the main topic here. But look, the core issue is that a community with a fixed amount of money works exactly like a game of poker. In the end, one person walks away with everything. Everyone else—those who weren't as productive, maybe just worked less hard, or simply didn't have the same head start—ends up with nothing at all. I think Americans have already seen this play out before. It actually explains why things completely shifted once the Gold Rush hit. You suddenly had this massive influx of new money backed by gold entering the system.

But look, our legal system has basically outlawed the existence of new physical cash. All they allow is credit. And honestly, money coming from abroad is just as real. It’s hard to say what percentage of actual money exists that isn't someone else's debt. That’s all thanks to Americans and everyone else out there who only produces credit. Of course, the Federal Reserve does the same thing, though their hands are pretty tied because they're constantly sweating over keeping the dollar stable.

It’s just pure absurdity over in Europe. The Federal Reserve was set up with this specific amount of capital, yet their charter says they’re only supposed to issue credit. Honestly, if that was their only job, they wouldn't have needed any initial capital at all since they hold a total monopoly on issuing the dollar. They could just print as much as they wanted. That’s exactly what they’re doing now because you can't keep operating forever based solely on that starting capital. It’s basically a perpetual motion machine. And besides that, it just proves the whole system couldn't actually start from scratch. If the initial capital were zero, nobody would own any dollars. They would just issue them to everyone as credit and then try to collect them back with interest later. Yeah, right. You can see immediately that wouldn't work. Even if you gave the money to the best people and kept it away from everyone else, you still see that money can't just multiply itself enough to pay back those interest rates.

By the way, they just sold this little trick to Americans recently. If you actually bothered to read closely, they basically said: We aren't going to hand out credit to everyone, only to those who can actually pay it back.
The logic goes like this. You can't pull X amount out, so maybe you try pulling X/3 instead. Think about it. But if you take three times as long, you end up with X again. And the only money moving through the system comes from these loans. It’s obvious right away that the people taking these loans have to essentially rob—or earn from—everyone else who didn't take one just so they can pay it back. And they have to do that three times over. That’s the "solution." Just pure nonsense, where you only see the result of the deception after three times the duration has passed. There isn't any real cash available to cover the interest.

We inherited this same stunt here, so the Government immediately decided to only offer credit to the "best" candidates. But who are these "best" people? They're the ones already stuck and unable to move forward without credit in the first place. It's ridiculous. If someone is struggling now, they’ll just struggle easier later because they've loaded themselves down with debt that costs money. I might actually believe there was a new credit expansion on the horizon. That's what Janet Yellen promised, but they shut her down. It's a mixed bag. Everyone taking these loans will find it harder to repay them because there aren't any massive new investments happening. My advice to everyone would be to expect an even bigger crisis. And it seems perfectly clear to me that the forward-thinking people who still run profitable companies are laying off workers before they get buried under debt. Better to live decently on current capital than to wait, go bust, and end up with nothing. Look at Walmart. This whole game of opening more locations won't last long. Everything will only shift once there is enough new money circulating. Enough money, because the banks are demanding massive interest rates on the loans they've already issued.

So, keep a close eye on the situation in Greece. There isn't any difference. They are just further along in the debt cycle.

There is no wisdom in this. Working hard, saving money, and all the "right" behaviors just slow down the endless borrowing, but they can't stop it. It's been shown that even inflation within a system like this leads to a crisis. Slowly, but surely. Time will show that everything I'm saying is true.

Maria Thomas48, printing money just devalues currencies, which subsequently degrades our debt since bond interest rates are fixed. You mentioned yourself that debt equals money. Therefore, as money loses value, the debt becomes less "valuable" too. You cannot issue currency without reducing the weight of debt in that specific currency. Since all global currencies are inflating—and given how rapidly the dollar is inflating, to put it mildly—it would be sensible to shift at least a portion of the debt into dollars to wipe it out. Perhaps the Euro could be protected by a higher gold price following the dollar's devaluation.
You are far too preoccupied with the national debt. What actually concerns me is that this debt is completely unmanaged. I am much more worried about individual debt and those entities that took on variable interest rates. That is where the core problem lies. To reiterate: if American citizens are paying $1 billion in annual interest alone, they have only themselves to blame, along with the rest of the world. Everyone must answer for their own financial decisions if they expect to manage money reasonably. Change needs to happen at the household level. Every individual needs a sustainable balance sheet, and only then will the system itself become sustainable.
I believe you are entirely mistaken in claiming it is impossible for everyone in a community to profit without someone else losing out. It is possible for one party to profit without causing a loss to another. The trick is ensuring that those without solid collateral do not take on debt they cannot repay in cash. If someone lacks the means, they simply shouldn't borrow; that way, they won't end up in the red. This brings us to a harsh truth. If Americans didn't go into debt, banks wouldn't find it so easy to turn a profit unless someone were actively risking capital through investment. For the system to remain viable, we would need an agreement where money isn't just issued, where banks don't charge arbitrary interest, or where interest rates are balanced between savings and loans to sustain both savers and borrowers. This implies creating actual new value, from which only a fraction goes to banks as a service fee. Those incapable of adding value should not be borrowing. The order should be: savings first, then credit expansion, governed by a specific set of agreed-upon rules.
Essentially, bailouts and money printing should be banned. That would force everyone to think twice before borrowing or taking a loan. This would lead to a much finer equilibrium in interest rates. Furthermore, if someone does choose to go into debt, they must bear full responsibility for that decision.
And if they fail, it's fine. They invested poorly. That is the essence of a market. If you can't afford it, don't borrow.
Regarding the current situation, one should start saving immediately at every level and capitalize on the fact that all global currencies are inflating, especially the dollar.
Again, your observations are sharp, but your solutions strangely mirror those who advocate for quantitative easing. Once currencies devalue to the point of being worthless wallpaper, even your debt will effectively hit zero.☕
It is essentially the same debate between deflationists and inflationists in the US.
Deflationists argue that debts and credits are so massive that no amount of money printing can offset the deflationary pressures. They fail to realize that only real, physical money actually circulates in the system, and increasing that mass inevitably drives up the prices of all asset classes that must still be paid for with paper. Since everyone "must" eat and consume energy, consumption cannot drop significantly; this leads to inflation and relative price increases in food and energy, driving up all costs. When 99% of people can no longer even contemplate certain asset classes, there practically won't be a market left for those assets.😉
The idea that there is no long-term market is unsustainable.
So, all you really need to do is change your lifestyle, embrace the principle of saving, and ensure you don't liquidate the very resources that will sustain you in the future.Protecting yourself as an individual is one thing. Regarding the state of the nation, I’ve already laid out how you reverse the trend: stack dollars, buy gold, and wait out the inflation while watching those drowning in debt struggle for air. Since everyone is leveraged, some kind of equilibrium is inevitable—whether you like it or not. The system is already pushed to its breaking point when it comes to everyday Americans.

Robert Vaughn10 said:Maria Thomas48, printing money just devalues currencies, which subsequently degrades our debt since bond interest rates are fixed. You mentioned yourself that debt equals money. Therefore, as money loses value, the debt becomes less "valuable" too. You cannot issue currency without reducing the weight of debt in that specific currency. Since all global currencies are inflating—and given how rapidly the dollar is inflating, to put it mildly—it would be sensible to shift at least a portion of the debt into dollars to wipe it out. Perhaps the Euro could be protected by a higher gold price following the dollar's devaluation.
You are far too preoccupied with the national debt. What actually concerns me is that this debt is completely unmanaged. I am much more worried about individual debt and those entities that took on variable interest rates. That is where the core problem lies. To reiterate: if American citizens are paying $1 billion in annual interest alone, they have only themselves to blame, along with the rest of the world. Everyone must answer for their own financial decisions if they expect to manage money reasonably. Change needs to happen at the household level. Every individual needs a sustainable balance sheet, and only then will the system itself become sustainable.
I believe you are entirely mistaken in claiming it is impossible for everyone in a community to profit without someone else losing out. It is possible for one party to profit without causing a loss to another. The trick is ensuring that those without solid collateral do not take on debt they cannot repay in cash. If someone lacks the means, they simply shouldn't borrow; that way, they won't end up in the red. This brings us to a harsh truth. If Americans didn't go into debt, banks wouldn't find it so easy to turn a profit unless someone were actively risking capital through investment. For the system to remain viable, we would need an agreement where money isn't just issued, where banks don't charge arbitrary interest, or where interest rates are balanced between savings and loans to sustain both savers and borrowers. This implies creating actual new value, from which only a fraction goes to banks as a service fee. Those incapable of adding value should not be borrowing. The order should be: savings first, then credit expansion, governed by a specific set of agreed-upon rules.
Essentially, bailouts and money printing should be banned. That would force everyone to think twice before borrowing or taking a loan. This would lead to a much finer equilibrium in interest rates. Furthermore, if someone does choose to go into debt, they must bear full responsibility for that decision.
And if they fail, it's fine. They invested poorly. That is the essence of a market. If you can't afford it, don't borrow.
Regarding the current situation, one should start saving immediately at every level and capitalize on the fact that all global currencies are inflating, especially the dollar.
Again, your observations are sharp, but your solutions strangely mirror those who advocate for quantitative easing. Once currencies devalue to the point of being worthless wallpaper, even your debt will effectively hit zero.☕
It is essentially the same debate between deflationists and inflationists in the US.
Deflationists argue that debts and credits are so massive that no amount of money printing can offset the deflationary pressures. They fail to realize that only real, physical money actually circulates in the system, and increasing that mass inevitably drives up the prices of all asset classes that must still be paid for with paper. Since everyone "must" eat and consume energy, consumption cannot drop significantly; this leads to inflation and relative price increases in food and energy, driving up all costs. When 99% of people can no longer even contemplate certain asset classes, there practically won't be a market left for those assets.😉
The idea that there is no long-term market is unsustainable.
So, all you really need to do is change your lifestyle, embrace the principle of saving, and ensure you don't liquidate the very resources that will sustain you in the future.Protecting yourself as an individual is one thing. Regarding the state of the nation, I’ve already laid out how you reverse the trend: stack dollars, buy gold, and wait out the inflation while watching those drowning in debt struggle for air. Since everyone is leveraged, some kind of equilibrium is inevitable—whether you like it or not. The system is already pushed to its breaking point when it comes to everyday Americans.

I'm pretty swamped with work right now, so I won't have time to sit down and write out a massive, detailed breakdown. But I'll eventually show you an example that proves your point doesn't hold water. This whole idea of "monetary profit versus loss" is exactly what economists can't seem to wrap their heads around.

Best,

I am not talking about cash profit—that’s likely where the misunderstanding lies—but profit in a broader sense. People get bogged down in discussions about loans and interest rates, which makes your points hit home for most citizens. There is simply no justification for going into the red and paying a billion dollars in annual interest.
My point is this: if this system isn't overhauled, it will collapse. It has to be revised. And once that revision happens, your debt will at least partially be wiped out through one method or another. If things are managed with actual control, there is a much lower chance of being forced to liquidate vital resources, which is what actually matters, not the debt itself.
What you can do right now is avoid taking on debt and protect yourself personally; that’s how you make things easier. As for the Government, I’ve already outlined the possible exits; it’s not a one-way street. For instance, borrow a few billion dollars, buy $500 million worth of gold, and balance the budget. There are studies suggesting an ounce of gold could hit $50,000. It’s feasible because all the world's gold could fit in a small briefcase. At that price point, you wipe out the debt. That is when the true nature of debt and this entire system is revealed: the debt and its interest on non-existent money are largely artificial, while real assets are what actually hold value.
The only sensible move is to save within the legal framework at every level and use a portion of those accumulated funds for investments.

I finally finished putting together an Excel spreadsheet that acts as a proof of concept for how private sector profits directly link to the government budget deficit. You can grab the file here at ProfitCompany.xls or just head over to my website and find the attachment at the bottom of the page.

The sheet is locked so you can't mess with the fixed revenue numbers, but I left the expenses—those white cells—wide open for you to play with. That way, you can model out a budget that results in either a deficit or a surplus. If you follow the logic used in this specific workbook, you could even build your own xls files with entirely different transaction sets.

Now you can tweak the amounts as much as you want to see how it impacts private sector cash profits. Anyone sitting with a negative balance will end up as a loser if they keep that same sign on their balance. On the flip side, those with a positive balance who maintain it through subsequent periods become profitable entities with actual cash in hand.

I should also mention that the new $500 million credit line taken out by our Government increases the total debt when you factor in the interest costs. According to Suker, that isn't considered additional debt. Sure, it might seem relatively small, but we’ve essentially pushed more debt into the future because we couldn't cover the current installment right now. And honestly, who's to say we won't have more money to pay it off in a year or two? The reality is that repayment installments just keep getting larger every year because the underlying debt itself keeps growing.

Best to everyone.

Maria Thomas48 said:I finally finished putting together an Excel spreadsheet that acts as a proof of concept for how private sector profits directly link to the government budget deficit. You can grab the file here at ProfitCompany.xls or just head over to my website and find the attachment at the bottom of the page.

The sheet is locked so you can't mess with the fixed revenue numbers, but I left the expenses—those white cells—wide open for you to play with. That way, you can model out a budget that results in either a deficit or a surplus. If you follow the logic used in this specific workbook, you could even build your own xls files with entirely different transaction sets.

Now you can tweak the amounts as much as you want to see how it impacts private sector cash profits. Anyone sitting with a negative balance will end up as a loser if they keep that same sign on their balance. On the flip side, those with a positive balance who maintain it through subsequent periods become profitable entities with actual cash in hand.

I should also mention that the new $500 million credit line taken out by our Government increases the total debt when you factor in the interest costs. According to Suker, that isn't considered additional debt. Sure, it might seem relatively small, but we’ve essentially pushed more debt into the future because we couldn't cover the current installment right now. And honestly, who's to say we won't have more money to pay it off in a year or two? The reality is that repayment installments just keep getting larger every year because the underlying debt itself keeps growing.

Best to everyone.

Given the current balance of power, this isn't even debatable. I emphasized that in my first post here. However, I contend that by shifting policy in response to global conditions, things could turn out quite differently. There is no better situation for a borrower looking to deploy capital than the current position of the dollar. And I have to correct you there—unfortunately, the debt is in euros, and the euro is a less arbitrary currency. Again, it would be ideal to borrow in dollars; while they appear strong as the world reserve currency, they are internally rotten, inflated, and almost certainly destined for collapse within the next 5 to 10 years. Therefore, we should repeatedly borrow in dollars to stimulate the economy and cut taxes as much as possible, hoping the budget fills up sufficiently in the long run. Every lost day means we will struggle to pay it all back later, leading to a massive drop in living standards. Not to mention how disastrous rising gas prices look for our domestic manufacturing. The argument being made is that the dollar is strengthening against the local currency, when in reality, the dollar is weakening—which is becoming evident in the rising prices of oil at $85 per barrel and natural gas. Regardless of whether the exchange rate moves up or down, you still have to pay. At the pump, gas is already $2.75 and has likely been climbing for some time.
Instead of focusing entirely on production and aligning everything to support it—to avoid a major decline in living standards—unions are whining about 5% cuts, completely oblivious to the gravity of the long-term outlook. With this current policy, the decline will be closer to 40%.☕
That implies professors might end up with real wages of $1000. Then those same unions will fight to ensure their pay isn't cut by another 5%, acting as if they’ve achieved something monumental...

Happy Easter!

Maria Thomas48:
It is impossible for everyone to maintain a constant surplus, just as it is impossible for everyone to remain in a perpetual deficit. The fundamental concept is that total consumption should ideally mirror total production. This balance shifts over time. Today, China might hold a surplus while a nation like Greece runs a deficit, but in five years, those positions could easily flip. The essential point is that the net sum always equals zero. The system is designed to be self-correcting, allowing individuals to maintain their own equilibrium.

Robert Vaughn10:
Your vision of the future seems entirely dependent on the inflation of the dollar. We must remember that the dollar remains the world's primary reserve currency; it carries significant weight because people believe in its value, and there is a reason for that confidence. If the major players stopped valuing the dollar, the rest would follow quickly, and the currency would become worthless. That hasn't happened yet. In my view, it would be irresponsible to base an entire government economy on the speculative gamble that the dollar will lose value. I have nothing against Suker taking out loans in dollars—in fact, I much prefer seeing him borrow in dollars rather than euros—but these are still debts that must be repaid! Let them borrow in dollars if the rates are better, but not under the assumption that inflation will magically erase the debt! Every debt eventually comes due.

Gregory Williams7 said:Maria Thomas48:
It is impossible for everyone to maintain a constant surplus, just as it is impossible for everyone to remain in a perpetual deficit. The fundamental concept is that total consumption should ideally mirror total production. This balance shifts over time. Today, China might hold a surplus while a nation like Greece runs a deficit, but in five years, those positions could easily flip. The essential point is that the net sum always equals zero. The system is designed to be self-correcting, allowing individuals to maintain their own equilibrium.

Robert Vaughn10:
Your vision of the future seems entirely dependent on the inflation of the dollar. We must remember that the dollar remains the world's primary reserve currency; it carries significant weight because people believe in its value, and there is a reason for that confidence. If the major players stopped valuing the dollar, the rest would follow quickly, and the currency would become worthless. That hasn't happened yet. In my view, it would be irresponsible to base an entire government economy on the speculative gamble that the dollar will lose value. I have nothing against Suker taking out loans in dollars—in fact, I much prefer seeing him borrow in dollars rather than euros—but these are still debts that must be repaid! Let them borrow in dollars if the rates are better, but not under the assumption that inflation will magically erase the debt! Every debt eventually comes due.

So how exactly do you think you force banks to take losses?

Also, that surplus belongs to someone else's savings. So, are you actually arguing for a society where long-term saving is basically forbidden?

Companies that break even over the long haul don't provide anything to the owners—they just benefit the employees—so those companies eventually get liquidated. I saw this with a friend of mine after fifteen years on the job. He just walked away because he decided the effort wasn't worth the payoff.

and so on.

Originally, the rule was that profitable businesses had to survive. Now, suddenly, we're hearing that they should be forced to take losses just to bail out others? It’s probably because there’s no other way when you have a fixed amount of money circulating in the community.

But that doesn't work in the real world. Only Robin Hood could actually balance the books like that.

Best,

Gregory Williams7 said:Maria Thomas48:
It is impossible for everyone to maintain a constant surplus, just as it is impossible for everyone to remain in a perpetual deficit. The fundamental concept is that total consumption should ideally mirror total production. This balance shifts over time. Today, China might hold a surplus while a nation like Greece runs a deficit, but in five years, those positions could easily flip. The essential point is that the net sum always equals zero. The system is designed to be self-correcting, allowing individuals to maintain their own equilibrium.

Robert Vaughn10:
Your vision of the future seems entirely dependent on the inflation of the dollar. We must remember that the dollar remains the world's primary reserve currency; it carries significant weight because people believe in its value, and there is a reason for that confidence. If the major players stopped valuing the dollar, the rest would follow quickly, and the currency would become worthless. That hasn't happened yet. In my view, it would be irresponsible to base an entire government economy on the speculative gamble that the dollar will lose value. I have nothing against Suker taking out loans in dollars—in fact, I much prefer seeing him borrow in dollars rather than euros—but these are still debts that must be repaid! Let them borrow in dollars if the rates are better, but not under the assumption that inflation will magically erase the debt! Every debt eventually comes due.

The irony is that the big players don't actually value the dollar. Look at what's happening under the surface. We're sitting on a $1.5 trillion deficit. Just based on that alone, inflation is going to bleed into the system. The system is incredibly overleveraged because unofficial inflation is already hovering near 10%. 10%! And that's even with all the current deflationary pressures. The Government Inflation rate is at 2.5%, but that doesn't account for food and energy. Do I trust government propaganda or actual reality?
We are drowning in debt anyway, and Maria Thomas48 is absolutely right when she says these debts are practically impossible to repay. We simply don't have the substance to settle them. Which brings me back to my point: previous fiscal behavior has been reckless. My plan—which centers on a balanced budget, aggressive tax cuts, buying gold, and borrowing in dollars—would be at the very least better than our current mess. Those loans wouldn't necessarily need to be repaid because bond interest is fixed, which plays right into Saud's hands since they carry the most debt. Just this past March, the US Government took on another $300 billion in debt. Does anyone actually believe that much cash exists, or are we watching monetization in real-time? Look at gas prices at the pump. What happens when oil jumps from $85 to $150 a barrel like it did in 2008? Even at Goldman Sachs, a bank known for its heavy manipulation, they're warning that commodities could see sudden, violent upward swings. On the other hand, the Federal Reserve claims interest rates cannot stay too low for long, which knocked nearly 100 points off the Dow yesterday. So, you have a perfect storm: rising prices—especially food and energy—an impending credit crash, and a government printing massive amounts of paper. The only possible result is a hyperinflationary depression. An unofficial report 😁 also suggests that the only bank in Canada trading gold doesn't actually have the physical bullion in its vaults. It’s gone. Poof. With 10-year bond yields at 4%, we're entering territory that Greenspan himself warned was dangerous for credit markets. Add up what Greenspan, the Federal Reserve, and Goldman Sachs are saying. It doesn't look good. The speculation phase is nearing its end, and we need to be positioned better than we are now. There might be some more maneuvering for perhaps another six months, but the clock is ticking.

Nostradamus:
Banks can be forced into losses through several methods: defaulting on debt (writing off uncollectible loans as losses), taking out loans in a currency that eventually devalues against the local currency, or even just keeping savings in a specific bank where interest payments count against them, and so on.

As you can see, there are numerous ways to drive a bank into a deficit. The system is designed around a fixed ratio of depositors to debtors. It was never intended for a scenario where everyone saves, or where everyone takes out loans simultaneously. If that happens, the entire system collapses. That is the point you seem to be missing.
What happened to your friend is simply his own misfortune. It doesn't affect me, as I have conducted business profitably for years. I reinvest my profits and help others generate their own. It is a self-sustaining cycle—a perpetual motion machine governed by the laws of supply and demand. Just because you cannot grasp it does not mean it isn't working. 😉

Robert Vaughn10:
I agree with your assessment, but I still believe that taking out a loan in a specific currency just because you hope you won't have to pay it back is a mistake. That applies to both individuals and the government. You see certain things, and I see them too. I agree that the dollar will drop significantly at some point. However, that remains speculation by definition. You might be right today, but tomorrow that gamble could come back to haunt you. Furthermore, if you look at current banking offerings, no major bank is approving loans in U.S. dollars right now.

Gregory Williams7 said:Nostradamus:
Banks can be forced into losses through several methods: defaulting on debt (writing off uncollectible loans as losses), taking out loans in a currency that eventually devalues against the local currency, or even just keeping savings in a specific bank where interest payments count against them, and so on.

As you can see, there are numerous ways to drive a bank into a deficit. The system is designed around a fixed ratio of depositors to debtors. It was never intended for a scenario where everyone saves, or where everyone takes out loans simultaneously. If that happens, the entire system collapses. That is the point you seem to be missing.
What happened to your friend is simply his own misfortune. It doesn't affect me, as I have conducted business profitably for years. I reinvest my profits and help others generate their own. It is a self-sustaining cycle—a perpetual motion machine governed by the laws of supply and demand. Just because you cannot grasp it does not mean it isn't working. 😉

Robert Vaughn10:
I agree with your assessment, but I still believe that taking out a loan in a specific currency just because you hope you won't have to pay it back is a mistake. That applies to both individuals and the government. You see certain things, and I see them too. I agree that the dollar will drop significantly at some point. However, that remains speculation by definition. You might be right today, but tomorrow that gamble could come back to haunt you. Furthermore, if you look at current banking offerings, no major bank is approving loans in U.S. dollars right now.

I absolutely agree that speculation shouldn't be treated as a lifestyle choice; it needs to be phased out of any future economic model, both globally and domestically. However, if you balance the budget and cut taxes, you're essentially forcing yourself to move forward from a position of strength, which isn't exactly speculation. My point is simply that we should temporarily leverage that speculation to our advantage. Since this global speculation will take time to play out, it’ll eventually manifest. When discussing dollar-denominated debt, we are primarily talking about a nation where bond interest is fixed. We've already taken on $1.5 billion in debt at a 6% rate, which looks like a solid deal to me. So, it's doable...
We're taking on debt anyway, so why not do it against an inflated dollar?
At this stage, the focus isn't so much on Davor Šuker—whose moves are fairly predictable—but rather on the Federal Reserve. The Federal Reserve's actions will dictate how hard we fall. If they pick up a few hundred million dollars in gold, we might actually come out okay.

Gregory Williams7 said:Nostradamus:
Banks can be forced into losses through several methods: defaulting on debt (writing off uncollectible loans as losses), taking out loans in a currency that eventually devalues against the local currency, or even just keeping savings in a specific bank where interest payments count against them, and so on.

As you can see, there are numerous ways to drive a bank into a deficit. The system is designed around a fixed ratio of depositors to debtors. It was never intended for a scenario where everyone saves, or where everyone takes out loans simultaneously. If that happens, the entire system collapses. That is the point you seem to be missing.
What happened to your friend is simply his own misfortune. It doesn't affect me, as I have conducted business profitably for years. I reinvest my profits and help others generate their own. It is a self-sustaining cycle—a perpetual motion machine governed by the laws of supply and demand. Just because you cannot grasp it does not mean it isn't working. 😉

Robert Vaughn10:
I agree with your assessment, but I still believe that taking out a loan in a specific currency just because you hope you won't have to pay it back is a mistake. That applies to both individuals and the government. You see certain things, and I see them too. I agree that the dollar will drop significantly at some point. However, that remains speculation by definition. You might be right today, but tomorrow that gamble could come back to haunt you. Furthermore, if you look at current banking offerings, no major bank is approving loans in U.S. dollars right now.

Maybe you could actually put that perpetual motion idea on paper with some actual math. Show where the money for the profit comes from. A real analysis. Start with the initial cash holdings of everyone in the country—you, the people who will also profit, and everyone else. Project it out, say, ten years. Then show the financial status of the rest of the country, the federal government, your own standing, and the standing of those who were supposed to earn alongside you. A real long-term plan. Assume the country has a zero balance of trade with foreign nations. Zero inflation. Perfect conditions.

If you can't do that, then it's just a bedtime story or a pure utopia (to be more technical).

Put it in an Excel sheet so it's transparent, instead of this wall of text full of buzzwords about hard work, effort, saving, smart investing, bartering, and all that. I only care about making money. We all know you don't make a profit from labor; you just exchange labor for money.

Regards.

I disagree. I understand how the system works, and quite frankly, I have no need for its assistance. For those who struggle to grasp these mechanics, however, such guidance is essential. But knowledge comes at a price. It takes a full year at a business school to truly master it. $1667The postgraduate tuition is $3,000. If someone wants to pay it, that is their prerogative. I have already explained how things work at a forum level. You seem unable to grasp the concept. Pay for your degree first. Only then can we have a conversation.

It is a clear demonstration that your argument lacks foundation. The financial system—complete with inflation and interest rates—has existed since the very invention of currency, and it hasn't collapsed yet. Therefore, one of us must be mistaken. Which one is it?