The Financial System and Money Supply

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). 😉

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.

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.

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.🙂

Maria Thomas48 said: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.

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.

So according to you, Zimbabwe should just be bursting with profits right now instead of dealing with hyperinflation, starvation, and 94% unemployment?

Maria Thomas48 said:

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.🙂

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...

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.

Douglas Reed3 said:So according to you, Zimbabwe should just be bursting with profits right now instead of dealing with hyperinflation, starvation, and 94% unemployment?

I mean, you’ve got to see the math on this. It’s just not realistic to expect a tiny 6% slice of the workforce to generate enough profit to keep the entire country running. If that happens, you end up with a massive deficit like they have in Zimbabwe, where all that new money becomes completely worthless. At the end of the day, that new cash doesn't actually represent any real value—not like it did back before hyperinflation took over everything.

Those mathematical formulas they throw around need to be supplemented with actual, real-world estimates of newly created value. If we want a budget deficit that actually means something, it needs to be based on real value. For instance, it would probably be a better move if the government only used deficit spending to cover salaries for public sector employees. They don't turn much of a profit anyway, and you could honestly employ a lot more people that way. But here’s the thing. If the private sector isn't actually creating any new value—if it's just full of middlemen who squeeze the original producers—then we have a problem. You see this all the time in the dairy industry or with big agribusiness. These middlemen take massive profits while doing very little actual work, which essentially undervalues our currency and drives up inflation. Basically, the desire to grab huge margins with minimal labor leads directly to either money inflation or widespread bankruptcies, depending on how the government decides to fund that deficit. Some brilliant economist could probably write a whole dissertation proving that point. Now, this doesn't apply to export businesses. When companies earn dollars from exports, those funds just get swapped back into our domestic currency. Or, the Federal Reserve takes the foreign reserves and issues more dollars—it's effectively the same thing. On a macro level, it's actually beneficial for the country to maintain a large surplus, even if it involves relatively little labor. However, when a nation focuses on selling overpriced goods to others, they end up running a high trade deficit, and the entire problem just shifts onto the national debt.

It’s tough to get an accurate mathematical read on our current situation because the actual financial system relies on secondary bank emissions that completely distort the picture of what's happening in the country. Then there's the trade deficit. You can easily plug that into a formula, but once you do, the result looks even uglier than we care to admit. Of course, if someone actually had access to the real data—things like cumulative bank lending, current loan placements, expected repayment values, production numbers, and probably a dozen other metrics—they could plug those variables into the equations and know exactly where this nation stands before the news even catches wind of it. They could predict things with incredible accuracy. And if they knew that, maybe they'd also know which levers to pull to steer the outcome in the right direction. That's supposed to be the job of a macroeconomist. I don't plan on studying economics just to realize something is broken.

But honestly, when you take these equations and layer them over some basic statistical data, it becomes pretty obvious. Even someone who isn't an economist could see that the government is making the wrong calls here. They're just leading us all straight toward a disaster.

I’d like someone to actually prove why primary issuance is such a bad idea. Specifically, I want to see proof that the debt we pile up by financing budget deficits through loans can actually be paid back after, say, X number of years. You have to look at the reality of the situation here—we don't have a trade surplus to work with. Watch out for selling off state assets just to pay down debt—like selling off national parks or public lands. It might look like you're creating a surplus on paper, but in reality, it’s a massive loss. You're basically just shrinking the country's capital to make the debt numbers look smaller.

If what’s being described above is actually an impossible mission, then we might as well just come out and admit it right now. 😕

How would you actually envision an exit strategy from this crisis, given everything we’re seeing right now? If the answer is supposed to be running a surplus in international trade, why hasn't that worked for us for all these years? I think we can all agree that having a trade surplus is basically the prerequisite for moving away from a pegged currency system. But honestly, telling someone that is like walking up to a guy living in poverty and saying, "I have the solution for you: just get rich." It doesn't mean much. We need a plan that actually functions, and we haven't had one since the last decade. To make things even more interesting, it’s incredibly hard to find any country that actually maintains a surplus in the exchange of goods. I know for a fact that China pulls it off, as do the oil producers in the Middle East, and Russia is close to it because they leaned so heavily into energy trading. If you strip away bank loans, the sum of all national balances should technically equal zero. As it stands, the total earnings across the board are deep in the red. Or maybe I'm just wrong about that. But if that were true, what would the implications be? You’d essentially have to create new money just to balance the scales back to zero.

So. Look. If you actually have the data on current debt levels versus the cumulative total earnings (external) for all countries, you can just add them up. And if that number isn't zero, it would be pretty weird if it were positive. But if it’s negative, then obviously you can't balance the books without injecting new money into the system. And that happens by printing banknotes. Or maybe by minting gold coins. Personally, I'd prefer the coin route. Honestly, maybe the solution is to start mining gold from the Mississippi River again and use that to pay off the debt. I think bankers would jump at the chance to settle debts with gold right away.

Maria Thomas48 said: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.

Look, being wrong isn't necessarily a bad thing. 😁
You did pick up on a few things quite accurately, though. :klap:

From what I understand—or at least, how I see things working—money is printed based on actual backing, meaning every single dollar issued represents some kind of real value, you know, something tangible...

At the same time, there’s always that careful balancing act of pulling money back out of the market just to make sure the currency stays steady and reliable.

Honestly, a government running a deficit isn't the disaster people make it out to be, provided all the other economic indicators are looking healthy and positive; sometimes, you just have to take on debt to reach that next level of growth. Because if that wasn't how the world worked, you and I probably wouldn't be sitting here typing away right now, and we'd likely be freezing somewhere else entirely...

The whole point of money is that it keeps moving. The absolute worst-case scenario is when the people who actually have cash just stop spending it. Think of it like swimming upstream in a river: you're in a surplus if you're making headway against the current, you're in stagnation if you're just treading water, and you're in a deficit if the current starts pulling you back... It doesn't mean everything is falling apart. I mean, remember when Canada ran low on KM in the treasury recently?

And look, the math doesn't always have to balance out to zero perfectly every single time. Some years the plum trees yield a massive harvest, and other years they barely produce anything; when the crop is great, you're in a surplus, and when it fails, you're in a deficit. And then, maybe the following year, it's a bumper crop of olives instead...

neonhound10 said:From what I understand—or at least, how I see things working—money is printed based on actual backing, meaning every single dollar issued represents some kind of real value, you know, something tangible...

At the same time, there’s always that careful balancing act of pulling money back out of the market just to make sure the currency stays steady and reliable.

Honestly, a government running a deficit isn't the disaster people make it out to be, provided all the other economic indicators are looking healthy and positive; sometimes, you just have to take on debt to reach that next level of growth. Because if that wasn't how the world worked, you and I probably wouldn't be sitting here typing away right now, and we'd likely be freezing somewhere else entirely...

The whole point of money is that it keeps moving. The absolute worst-case scenario is when the people who actually have cash just stop spending it. Think of it like swimming upstream in a river: you're in a surplus if you're making headway against the current, you're in stagnation if you're just treading water, and you're in a deficit if the current starts pulling you back... It doesn't mean everything is falling apart. I mean, remember when Canada ran low on KM in the treasury recently?

And look, the math doesn't always have to balance out to zero perfectly every single time. Some years the plum trees yield a massive harvest, and other years they barely produce anything; when the crop is great, you're in a surplus, and when it fails, you're in a deficit. And then, maybe the following year, it's a bumper crop of olives instead...

It isn't.

neonhound10 said:From what I understand—or at least, how I see things working—money is printed based on actual backing, meaning every single dollar issued represents some kind of real value, you know, something tangible...

At the same time, there’s always that careful balancing act of pulling money back out of the market just to make sure the currency stays steady and reliable.

Honestly, a government running a deficit isn't the disaster people make it out to be, provided all the other economic indicators are looking healthy and positive; sometimes, you just have to take on debt to reach that next level of growth. Because if that wasn't how the world worked, you and I probably wouldn't be sitting here typing away right now, and we'd likely be freezing somewhere else entirely...

The whole point of money is that it keeps moving. The absolute worst-case scenario is when the people who actually have cash just stop spending it. Think of it like swimming upstream in a river: you're in a surplus if you're making headway against the current, you're in stagnation if you're just treading water, and you're in a deficit if the current starts pulling you back... It doesn't mean everything is falling apart. I mean, remember when Canada ran low on KM in the treasury recently?

And look, the math doesn't always have to balance out to zero perfectly every single time. Some years the plum trees yield a massive harvest, and other years they barely produce anything; when the crop is great, you're in a surplus, and when it fails, you're in a deficit. And then, maybe the following year, it's a bumper crop of olives instead...

If new currency is issued against a specific value, then that value has to be deposited. It’s that classic gold standard system. You can't just let that value float around the market to chase profits; it should only surface when you're pulling those issued dollars back and storing them in the same vault as the mint. If you use newly issued money to build an airport, you shouldn't sell it and count that as income. That would basically be treating primary issuance as revenue, which isn't right because you haven't actually provided anything in exchange for it. In my view, the best way to use money from primary issuance is to pay for labor. Once you've received the value of that work—like administrative services and stuff—you can't really go out and sell that work to someone else later.🙂

neonhound10 said:From what I understand—or at least, how I see things working—money is printed based on actual backing, meaning every single dollar issued represents some kind of real value, you know, something tangible...

At the same time, there’s always that careful balancing act of pulling money back out of the market just to make sure the currency stays steady and reliable.

Honestly, a government running a deficit isn't the disaster people make it out to be, provided all the other economic indicators are looking healthy and positive; sometimes, you just have to take on debt to reach that next level of growth. Because if that wasn't how the world worked, you and I probably wouldn't be sitting here typing away right now, and we'd likely be freezing somewhere else entirely...

The whole point of money is that it keeps moving. The absolute worst-case scenario is when the people who actually have cash just stop spending it. Think of it like swimming upstream in a river: you're in a surplus if you're making headway against the current, you're in stagnation if you're just treading water, and you're in a deficit if the current starts pulling you back... It doesn't mean everything is falling apart. I mean, remember when Canada ran low on KM in the treasury recently?

And look, the math doesn't always have to balance out to zero perfectly every single time. Some years the plum trees yield a massive harvest, and other years they barely produce anything; when the crop is great, you're in a surplus, and when it fails, you're in a deficit. And then, maybe the following year, it's a bumper crop of olives instead...

What sum are we talking about here?

That airport is definitely going to pay off its initial investment—and I’ll admit I might be stretching things a bit there, since an airport is really such a vital public utility—but it’s absolutely going to end up turning a profit...

Nicole Collins13 said:It isn't.

I suppose it all just comes down to how you choose to see things...

Nicole Collins13 said:It isn't.

Actually, it gets worse. Imagine they lend you the money, but then you have to pay them back with interest.😁

neonhound10 said:That airport is definitely going to pay off its initial investment—and I’ll admit I might be stretching things a bit there, since an airport is really such a vital public utility—but it’s absolutely going to end up turning a profit...

I'm with you there. If the money from the primary issuance goes toward building export profits, then it's fine. But I still feel strongly that it shouldn't be put on the market if it's part of the permanent state assets that aren't up for sale.

Value is something you build from the ground up, and money works exactly the same way.

On the flip side, when you look at import and export dynamics—say, between the USA and the European Union—you don't necessarily have to print more cash to see a shift; sometimes it’s just about the exchange rate adjusting itself, which creates this sort of illusion where the actual amount of money stays the same, but its purchasing power effectively climbs...

neonhound10 said:Value is something you build from the ground up, and money works exactly the same way.

On the flip side, when you look at import and export dynamics—say, between the USA and the European Union—you don't necessarily have to print more cash to see a shift; sometimes it’s just about the exchange rate adjusting itself, which creates this sort of illusion where the actual amount of money stays the same, but its purchasing power effectively climbs...

I'm not entirely sure, honestly. I don't have enough expertise on the subject to say for certain that it's wrong. It just feels like someone has to pay for quality with quantity.

neonhound10 said:I suppose it all just comes down to how you choose to see things...

Perspective has nothing to do with it.

Maria Thomas48 said:I'm not entirely sure, honestly. I don't have enough expertise on the subject to say for certain that it's wrong. It just feels like someone has to pay for quality with quantity.

If you're looking for more, there's actually a really solid PDF called PARADOKS.pdf floating around online, which covers a bunch of economic paradoxes that might just spark a fresh idea for you...