The Financial System and Money Supply

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.

I honestly don't get where this idea comes from—this notion that if one party walks away with a gain, someone else must be losing out? It’s nonsense. A fair exchange happens strictly because it benefits everyone involved. If both sides weren't coming out ahead, the deal wouldn't even happen in the first place, would it?

And let’s be clear—profit doesn't mean some guy is just hoarding piles of cash in a Chase account.

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).🙂

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.🙂

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.

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.

Trade is an entirely different beast. The system you’re describing is purely imaginary—something that couldn't actually function in the real world—so any conclusions drawn from it are basically worthless. Let's look at the logic: one guy holds some gold, the other holds a painting, and there's absolutely nothing else involved? WTF? What are you even supposed to conclude from that? In that scenario, the gold is practically useless—maybe just as jewelry, if we're being generous. And if Joe Biden trades a painting for gold, it's simply because Joe Biden wants his wife to wear gold jewelry. Both parties come out ahead—Joe Biden gets his gold, and the other person gets their art. You can't view gold as "money" in this context, because money barely even exists in the system you've constructed.
To start with, trade isn't a zero-sum game. A merchant's profit isn't someone else's loss. Both the seller and the buyer walk away better off than they were before. Now, sure, there are types of trading that *are* zero-sum games, but that's a completely different conversation.

It’s not funny. We are living in an era of pure fabrication. Everything—our food, our politics, and our currency—has been falsified. Some people actually see a profit opportunity in manufacturing "healthy" food (sic). Isn't that just tragic? Healthy food? What else is food supposed to be if not healthy? What follows that—"healthy" medicine? But let’s leave food, medicine, and politics alone for a moment; we are on a forum that deals directly, if not indirectly, with money, so it isn't out of line to mention forged currency.

Any money that isn't capital in its own right—but instead represents someone else's debt and a mere promise—is nothing more than fake money. Here is some data regarding this counterfeit currency found in Mike Howard’s book, "Dollar Daze."

The average lifespan of all 559 fiat currencies (fake money) worldwide that are no longer in circulation was a mere 15 years. Meanwhile, the average for the 176 fiat currencies still currently in circulation is 39 years. The US dollar has existed for 219 years. Of those 219 years, it has been unbacked for only 38 years—meaning for 83% of its existence, it was backed by gold, which is precisely why it's still breathing. Within a year, that average will shift, and how much longer it will last is strictly a matter of time. Given the current global monetary and economic situation, if some kind of correction doesn't happen very soon, I don't foresee it lasting another century.

The global monetary system has already collapsed. Just as a corpse's hair and nails continue to grow for a short while after death, this dead monetary system continues to persist solely through its own massive inertia. The perceptive few—and there aren't many of them—can see that something is fundamentally broken, while the rest of the population, the vast majority, hasn't the slightest clue what is happening. They are far more concerned with the next episode of some idiotic TV show than they are with the reality of what is happening to their money.

The question remains: what will replace the current global monetary system? Will it be honest money, or just another new forgery?

Andrew Booth29 said:Trade is an entirely different beast. The system you’re describing is purely imaginary—something that couldn't actually function in the real world—so any conclusions drawn from it are basically worthless. Let's look at the logic: one guy holds some gold, the other holds a painting, and there's absolutely nothing else involved? WTF? What are you even supposed to conclude from that? In that scenario, the gold is practically useless—maybe just as jewelry, if we're being generous. And if Joe Biden trades a painting for gold, it's simply because Joe Biden wants his wife to wear gold jewelry. Both parties come out ahead—Joe Biden gets his gold, and the other person gets their art. You can't view gold as "money" in this context, because money barely even exists in the system you've constructed.
To start with, trade isn't a zero-sum game. A merchant's profit isn't someone else's loss. Both the seller and the buyer walk away better off than they were before. Now, sure, there are types of trading that *are* zero-sum games, but that's a completely different conversation.

Look, trading is a service that carries immense value—truly massive value—because without it, essentially every engine of progress driven by knowledge and technology would grind to a halt. Therefore, both trading and the commodities themselves directly influence the value of money.

The "Zero-sum game" concept applies to the NASDAQ. If one player wins, another loses. Period. No value is being created or extracted from thin air. That said, the NASDAQ serves an indispensable function because it uses supply and demand to price national currencies—something that simply wouldn't work if we were still tethered to the old International Monetary Fund agreements (you know, that fixed link to the USD and gold).

Amanda Allen4 said:Look, trading is a service that carries immense value—truly massive value—because without it, essentially every engine of progress driven by knowledge and technology would grind to a halt. Therefore, both trading and the commodities themselves directly influence the value of money.

The "Zero-sum game" concept applies to the NASDAQ. If one player wins, another loses. Period. No value is being created or extracted from thin air. That said, the NASDAQ serves an indispensable function because it uses supply and demand to price national currencies—something that simply wouldn't work if we were still tethered to the old International Monetary Fund agreements (you know, that fixed link to the USD and gold).

Not quite. 😉If you look at an individual transaction, Bloomberg is actually a negative-sum game. 🙂

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. 👍

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.

Aha, I see—you're calculating a negative deficit. Fine...

How exactly does that lead us to point number four?

If we assume the deficit is exactly zero, then the equation holds true:

"Total costs incurred by all entities" + "Total profits earned by all entities" = "Total gross revenue"

Which—let’s be honest—is just basic accounting we already knew before we even started.

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.

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.

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.🙂

Maria Thomas48 said: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.

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?

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

😂

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.