[jaxtellerSoA]

>I think you are implying the companies and people borrow money for shits and giggles.

Nope. I was just using an example. It could have been $100k and only $50K was lent out. You sill would need $105k at the end of the year to satisfy all debts and have an equilibrium within the economy. Where is the extra $5K coming from? Magic??

> The reality is that most companies borrow money only when the availability of extra capital would help them generate more revenues or capture additional market share.

This doesn't change the fact that the demand back for money will exceed the actually money supply.

It is simple math really. The fact that they are using the cash to, hopefully, generate more revenues is irrelevant.

Private companies have no control over the the supply of money. This is a central banking problem.

[kryogen1c]

>You sill would need $105k at the end of the year to satisfy all debts and have an equilibrium withing the economy. Where is the extra $5K coming from? Magic??

this makes very little sense. You are not lending the entire economy and then demanding more than the economy be paid back. You only lend a portion of the money supply so that a slightly larger portion is repaid.

Even if that were the case, isnt that what QE does?

[jaxtellerSoA]

>You are not lending the entire economy and then demanding more than the economy be paid back.

You are right that you are not lending the entire economy, I was just making the example as simple as possible. But, the second interest is being charged then the demand of money back exceeds the actual money supply. What companies and investors do to increase revue for 1 particular organization has no effect on the money supply. All companies are doing are vying to try and redistribute the money that already exists in their favor, they aren't creating money (if they are that is called counterfeiting and is illegal).

> Even if that were the case, isn't that what QE does?

Yes, QE increases the money supply. I am not saying that the money supply doesn't get increased (by the Federal Reserve), merely pointing out the fact that once you get on this treadmill it just goes faster and faster and faster, and there is no way to get off without a disaster (bubble).

[rjtavares]

> You sill would need $105k at the end of the year to satisfy all debts and have an equilibrium within the economy. Where is the extra $5K coming from? Magic??

The extra $5K come from the same place the initial $100k came.

[vageli]

What happens when there are new entrants to your economy? Are they all forced to split the 100k? If not, where does new money come from? Magic?

[jaxtellerSoA]

How do you guys think the money supply works?

I mean have never even thought about it?

>What happens when there are new entrants to your economy?

Nothing.

>Are they all forced to split the 100k?

No, if the new entrant can provide value then someone that already has some that $100K can give it to them for a good or service.

>If not, where does new money come from? Magic?

Comes from the Federal Reserve, when they decided to increase the money supply. The problem is you are on a never ending treadmill that is designed to have bubbles and failures, not that new money has to sometimes be created.