- Joined
- Feb 17, 2019
- Messages
- 147
- Reaction score
- 22
- Location
- Spain
- Gender
- Male
- Political Leaning
- Libertarian - Left
When an economy is not profitable or simply wants to pass itself off as more profitable than it really is, a trick can be established so that in the future, the costs of the activities of the present are paid, such as adding those costs to the debts of that economy.
In countries where such acts are carried out, citizens have to pay for both basic and non-basic products, so that in order for them to maintain companies that offer non-basic products, which are normally the ones that generate greater added value, first they must have achieved a sufficient level of income to have purchased the basic products they need.
Suppose we start from a society in which 50% of disposable income is used for the purchase of basic products and the remaining 50% for non-basic products.
If we add financial assets in that society based on the creation of a debt, in the short term, there will be a greater disposition of assets to acquire products. As what all consumers have in common is that they will have purchased basic products, there will have been an inflation in the price of these items and a deflation in the price of luxury products.
In this way, suppose that we arrive at a society in which 70% of disposable income is used for the purchase of basic products and the remaining 30% for non-basic products. If we now add financial assets based on the creation of debt again, we will reach a situation in which 80% of disposable income will be used for the purchase of basic products and the remaining 20% for non-basic products.
If we persist, we will eventually get to where we are today.
It doesn't matter how many assets you inject and how much you get into debt; You have reached such a level of inflation of basic products that 100% of what is injected has to be invested in them.
By injecting assets based on the creation of debt you are throwing the bills into a bonfire: you have collapsed.
Finally, the reason they collapse is because not enough added value is generated.
Let us suppose that financial assets based on the creation of debt are distributed among several profiles of consumers:
Some demand basic products and luxury products related to sports, other basic and luxury products related to the sea, other basic and luxury products related to beauty, other basic and luxury products related to the air ...
Sometimes, the prices of basic and luxury products related to sports will increase, other times the basic and luxury ones related to beauty, and other times the basic and luxury ones related to sports...
But what is going to be happening constantly is that the price of products that leave little added value (basic) will rise in relation to those that leave a lot (luxury goods).
In countries where such acts are carried out, citizens have to pay for both basic and non-basic products, so that in order for them to maintain companies that offer non-basic products, which are normally the ones that generate greater added value, first they must have achieved a sufficient level of income to have purchased the basic products they need.
Suppose we start from a society in which 50% of disposable income is used for the purchase of basic products and the remaining 50% for non-basic products.
If we add financial assets in that society based on the creation of a debt, in the short term, there will be a greater disposition of assets to acquire products. As what all consumers have in common is that they will have purchased basic products, there will have been an inflation in the price of these items and a deflation in the price of luxury products.
In this way, suppose that we arrive at a society in which 70% of disposable income is used for the purchase of basic products and the remaining 30% for non-basic products. If we now add financial assets based on the creation of debt again, we will reach a situation in which 80% of disposable income will be used for the purchase of basic products and the remaining 20% for non-basic products.
If we persist, we will eventually get to where we are today.
It doesn't matter how many assets you inject and how much you get into debt; You have reached such a level of inflation of basic products that 100% of what is injected has to be invested in them.
By injecting assets based on the creation of debt you are throwing the bills into a bonfire: you have collapsed.
Finally, the reason they collapse is because not enough added value is generated.
Let us suppose that financial assets based on the creation of debt are distributed among several profiles of consumers:
Some demand basic products and luxury products related to sports, other basic and luxury products related to the sea, other basic and luxury products related to beauty, other basic and luxury products related to the air ...
Sometimes, the prices of basic and luxury products related to sports will increase, other times the basic and luxury ones related to beauty, and other times the basic and luxury ones related to sports...
But what is going to be happening constantly is that the price of products that leave little added value (basic) will rise in relation to those that leave a lot (luxury goods).