Economy Money Flows Q&A #1

Gene Bellinger

If you consider the current National Debt, somewhere around $19 Trillion Dollars, less the cumulative trade deficit for the Foreign Sector, the remainder in the private sector should promote a very healthy economy. The Private Debt is about twice that amount. And since the money isn't in the economy might one sensibly ask where it is? It's a question I don't seem to find anyone asking. I wonder why that might be? Also, if you have questions or comments about the Economy Money Flows Perspective please post them here.

Vaughn Loeffler

RE: perspectives project, our ideas of what ‘Government’ & ‘Capitalism’ are (e.g. the recent TED talk)

Thnx again for the link to the TED talk yesterday regarding capitalism.

Coincidentally, just prior to your posted advice I had been continuing my research on how just a relative few European Imperialists had subjugated vast numbers of peoples & parcels around the globe beginning in the 17th century. The short story being in effect,,,,,,,,, that the imperialists succeeded in imposing their power & will over these peoples by collapsing and hijacking the natives established systems.

While I grant that the timeline for the full effect of these system takeovers took decades & centuries to complete, this effective use of power by a relative few (the original 0.01%s) to displace entrenched systems & enslave peoples is both impressive & highly disconcerting.

With respect to my general studies of history, systems, peoples, governance, economies, etc., etc.,,,,,, the precipitous question of my research was & is,,,,,, “how did/could they do it,,,,, and what is the modern day equivalent of such subjugation of the many by a few.”

While briefly looking at the impressive progress of the ‘Perspectives Project’ in KUMU with the fresh eyes from the TED talk on ‘what is capitalism’,,,, I clicked on this link ‘Economy Money Flows’ model, and then, something else clicked.

So briefly, here is something for us to ponder,,,, if we were to assume that the PEOPLE are the GOVERNMENT (similar to the thought that the people are the church not some building or entity),,,,,,, when the GOVERNMENT buys in to the new capitalistic system presented by the enticing & arm twisting ‘private’ interlopers, and, are then ‘graciously’ infused with vast sums of money from the PRIVATEERS (e.g. borrowing that increases so called national debt as presented in the KUMU model; bribes to local chieftans & placed ‘officials’ that are in effect subservient to the privateers),,,,, the PEOPLE have NOT been enslaved by others,,,,,,,,,,,,, they have in effect enslaved themselves.

To the new systems full gestation, the PEOPLE have been comprehensively enslaved, e.g. economically, politically and often, physically (e.g. debtors prisons, military drafts, etc.).

And sadly, often due to ignorance and or apathy,,,,, they have enslaved themselves by simply allowing their old system to be displaced by the new system with new but perhaps more effective grand slave-mastery. A new system with new GRAND MASTERS (0.01%s) pulling the proverbial strings and making the new rules,,,, rules of course that best serve them.

And lastly, ,,,, masters that are most often relatively INVISIBLE because as all wise puppet-masters know,,,, better that you use surrogates to fight your battles and collect the spoils of your deeds. Spoils such as: rents, taxes, monopolies, etc.,,,,,,, & of particular note here,,,,, interest from so-called ‘national debt’,,,,, a.k.a. the debts of the PEOPLE.

Gene Bellinger

@vaughnman Most assuredly... and I have to do some more work on this one...

Vaughn Loeffler


great models gene,,,, well done,,,,,,

and they lead in well to the early 20th & 21st century system dynamics,,,,

e.g. the early 20th century,,,, when pent up system pressures (function/dysfunction/unintended consequences, etc.) precipitated 'modern' economic philosophies, models, converts & behaviors contrary to the status quos of exploitive capitalism & imperialism,,,,

the world found itself at a point in time when puppet-masters thought a good world war would distract the multitudes,,,,, and they would/could get richer in the bargain.

although the complex and unpredictable systems did not necessarily respond as the puppet-masters might have expected/desired (though arguably there are always those that benefit from war (short of a nuclear Armageddon of course)),,,,,

WW1 did of course set up WW2 which served to fuel communism & the cold-war,,,,and for that matter,,,,, when I expand the timeline of the system(s) both backwards & forwards,,,,, all wars are seemingly related.

So as we have asked ourselves "what are such things/concepts as DEMOCRACY, GOVERNMENT, CAPITALISM, PRIVATEERS, etc., etc",,,,, can we also ask what ourselves "what is WAR?" That is to say, how does it fit into these respective systems & concepts?

BTW I simply pose this question to myself,,,, so I am not soliciting an answer. I just throw it out here for all to see as we progressively explore our thoughts, systems, concepts & models of our reality/realities.

Gene Bellinger

@vaughnman thanks for the thoughts to ponder. we'll see what shows up in a future model.

Jan Lelie

There are several issues here:

  • money nowadays is legal tender. This implies that there is nothing material to back it up, they're just numbers on a screen. It is being created "out of thin air". It is an addiction loop without a limit or constraint.

  • a lot of cash (printed money) has disappeared from view by "illegal" transactions, like drugs trade. In Europe, about 300.000.000.000 of bank notes is "missing"

  • money expresses a value and not a worth; for instance, your health is worth all the money you have, when you're sick. Or, another instance: I'm collecting pictures from an artist who has been disregarded for years.

  • human labor is being taxed, but machine labor is not. This drives out human labor at the expense of capital. In this respect, Marx was right.

All in all, the money system is fundamentally flawed.

Gene Bellinger

@JanLelie great points... only $300 billion missing? In the US we're missing about $32 trillion presently. And some continue to say we need to pay down the National Debt, though I wonder where they expect to take the money from? It is a perplexing situation.

Jan Lelie

No, not only $300 billion missing: that's "only" the amount of euro bank notes (mostly the Euro 500 notes, I've never seen one) we're missing. About 60 billion virtual euro's are being created every month.

Gene Bellinger

@JanLelie It seems there's a very big leak in the pool!

Jim B Cameron

I'm going to question the connection from private business to govt. In a Fiat currency isn't the main reason of taxation to drain money from the system so you don't get runaway inflation? Since money (debt) is just created by the Fed & banks it doesn't go towards paying for things in the way most people understand it so much as simply being drained back out the system?

Gene Bellinger

@JimBCameron We live in a fiat economy with laws and the law says the government can't spend money it doesn't have (and the government and the Fed are not on the same team). Please read... The National Debt is Congress's fault..

Jim B Cameron

Early question - how can a fiat currency become insolvent? Wasn't that why Nixon left the Gold Standard, to avoid that, and while the petrodollar underpins just about every other economy isn't it safe (till oil starts to dry up)?

Gene Bellinger

I think a fiat currency becomes insolvent when people no longer believe in it, meaning they won't accept it as payment. We don't actually have a fiat currency at the moment because the government does not have the right to print money, only the Fed does, and they're not part of the government. Doesn't the US currency become insolvent when people are no longer willing to lend money to the US so it has money to spend? The Fed won't, hasn't to date lent money to the government as far as I know.

Jim B Cameron

Does a fiat currency need to be produced by a government, or just accepted as legal tender?

Gene Bellinger

My understanding is that a fiat currency is one which the government has the right to create.

When I read articles in the arena I'm always looking for the guilty party... who stands to gain from the position posed by the author... and who stands to lose!

Jim B Cameron

'fraid I've ad-blocker installed & never found an easy way of turning it off other than going rooting round to find it somewhere in my system. :(

Isn't Bitcoin a fiat currency then?

Gene Bellinger

That's a good question. I thought it had to be created by a government.

Jim B Cameron

I don't know a great deal about it tbh, but it's creator is a bit 'shrouded in mystery' and it was realised as open source.

Jim B Cameron

Dammit! You know I'm going to have to find my copy of Jaron Lanier's, 'Who Owns the Future' & give it a read now! :S

Gene Bellinger

The answer to your question is probably "The Insects!"

Jim B Cameron
Jack Ring

What units of measure are you using for "money" and if dollar does you model assume the value of 'dollar' never changes?

Gene Bellinger

Jack Ring: Apparently the unit of measure is "dollar" so does your model presume it has a constant value?
Gene: In this particular model does it matter whether it's constant dollars or not? If it does then why?
Jack: In this particular model, sans timeline, it doesn't matter. However, seems to me this particular model also does not address your issue statement. Am I not comprehending your work?
Gene: Is there some particular aspect of the issue statement you don't see being addressed? The model shows a closed system indicating that to pay down the national debt requires a substantial inflow from the foreign sector or a massive extraction from the private sector which would either destroy the economy or migrate the national debt to become private debt. I thought this was a good short article.

Gene Bellinger

Kathryn Alexander: NICE, Gene!!!!!! I love systems modeling!!!! How would crime and mob activity connect with this?
Gene: Wouldn't any activity which extracted money from the flow have a negative impact on the economy?


Gene, Let me start by saying we agree debt is an existential threat and flawed mental models have brought us to this point. Here are a few points to ponder:
1 A growing part of national debt is principal and interest payments on that debt. This links to the important loop of ‘circular debt’. 30% of national debt is owed by one arm of the fed gov to another. While China holds about 6% of US debt, our own Fed holds 12%.
2 I don't understand your link of national debt to trade deficits. These have nothing to do with each other. Trade is something private sector does, it is not a 'debt' incurred by government.
3 The country can and DOES spend money it doesn’t have. That is what the Fed is all about, creating phony electronic money. The latest and most threatening scheme for growing money on trees is called Quantitative Easing, which added $12 tril in debt since 2001 (and this is independent of congressional budget deficits). In the 100 years of the Fed, these schemes have led to a debased currency, undermined private savings and pensions, created the environment for the IT and housing bubbles and increased private debt by buying private debt and near zero interest rates.
Private sector does NOT take money out of the economy when debt is paid because whoever gets that payment is also a part of the economy and the money is recycled.

Gene Bellinger


  • I don't understand the point you're trying to make in item # 1. Whatever the source of the debt interest payment on it only makes it larger doesn't it?
  • The model doesn't show a direct link between trade deficit and national debt. The trade deficit takes has a negative impact on the economy which ends up being offset either by Gov't spending or borrowing by private sector individuals.
  • The only thing Federal about the Federal Reserve is its name. The Fed is a private organization created in 1913 when Woodrow Wilson signed over the fate of our economy to the bankers. Even then quantitative easing doesn't put money into the economy, it just takes bad debt off the books of the member banks, which they don't need to lend anyway, it just makes them look better.
  • As for the private sector not taking money out of the economy when debt is paid, is it taken out of the economy if those who get it don't spend it for anything. How do you think certain people ended up with $32 trillion in off-shore tax shelters and organizations are holding about $5 trillion in cash they've extracted from the functioning economy.

This is really a great article...

Gene Bellinger
Gene Bellinger
Gene Bellinger
Gene Bellinger

@paul5526 Have you watched Chomsky's "Requiem for the American Dream"? It's available on Netflix and here's a summary...

Gene Bellinger

17.04.02 Jack Ring - Facebook
1. I think you should decide to model the economy (goods and services) OR the money (legal tender) market because these are not the same. I exchange dollars/pesos every time I go to Mexico. China and Japan manipulate exchange rates. Exchange rates vary over time but are not explicitly tied to the national debt.
2. If you want to explore your theory of running out of money then FWIW I think you have to include a node for the FEdeRAL Reserve and a way of showing the impact of debt defaults by various governments.

Or maybe I am not yet on your wavelength.

My response... 1. If the relationships depict US Economy Money flows how do the exchange rates, manipulated or not, alter the relationships? Don't they just alter the amounts? And as for being tied to the national debt, the trade deficit increases don't we either have to create more public debt to offset it or the gov't spend more? 2. I'm uncertain what you think the Federal Reserve has to do with this model? It's not on there for a reason.


Gene, I agree interest payments increase the debt. I only mentioned it because your video discusses the 'parts' of the debt but didn't mention that or the circular debt...people usually think of debt as something owed to others. We have stolen trillions from the SSA trust, god knows how how it will be replaced in time to cover the late 'boomer' retirees. Trump's idea of writing off the debt won't just hurt bankers.
But your video discussion does make that link of trade deficit and debt at the end: "the trade deficit isn't large enough to cause that much growth of debt' (something like that). How does trade deficit add to the debt or even hurt the economy? You sound like Steve Bannon (Trump doesn't know better). If quality steel is cheaper in China, then American cars can be produced at less expense, and possibly more cars can be exported if other quality and design factors are also good (and cheap). The term 'trade deficit' is a political invention. Trades are done because both parties (private) believe they got a good bargain. Countries shouldn't be involved at all.
Yes I agree on the Fed, except you commented earlier that the debt was caused by Congress. I hope you will be supporting the Audit the Fed bill moving up in Congress. Ron Paul has been against the Fed since the day he started talking about the economy.

I read the Corrente article, but need to do so again to possibly understand it all.

Gene Bellinger

@paul5526 I'm not an economist, thankfully, and how the economy works has made me crazy for years. As a result, I've lost track of how much reading I've done and I'm still at the point of not being sure what I really know, and what I think I know that may still be false is probably legend. As such I appreciate your questions and will try to answer based on my current understanding, which is evolving almost every day.

Here's an article I posted in Mid March that may shed some light on my thoughts about the effect of taking money out of the economy.

Consider your circulatory system like the flow of money in the economy. The organs in your body have critical functions to play in maintaining your health. Now suppose that each one of them considered their contribution to be so valuable that each organ decided to keep a little of the blood that flowed through it. It wouldn't be too long before you'd become anemic and need blood transfusions to survive. Some might say that it's not right for the organs to keep what they've earned and redistribution wouldn't be fair... even though it will kill the host and then they'll have none.

This is really awesome, and I've watched the movie on Netflix, and am now reading the book...

So what if they audit the fed? It's likely to cause a stink for a short time just like when they found out that the fed distributed $16 trillion dollars after the crash and didn't even tell anyone. Some claim Kennedy was assassinated because he was going to get the treasury the right to print $5 bills.


Gene, If you want to understand economics I suggest you avoid the advice you get from linguists.
You might want to take a look at for clear teaching about fundamental principles supported by solid evidence rather than speculations formed out of nothing more than mental gymnastics.

Gene Bellinger

@paul5526 Many thanks for the marvelous link and I will definitely spend some time there. Have looked at several of the videos and I will make time for this. As for Chomsky, you may consider what he presents as speculations formed out of nothing more than mental gymnastics though his ten principles and the basis for them, seems to spot on for what's currently happening, and how we got here.

Gene Bellinger

Jack Ring 2017.04.03 IMO An economy consists of the flow of goods and services. Money throttles the flow. (Except for those who exchange monetary tokens, e.g. dollar vs. yuan.) So money flows are moderated by invention and productivity gains in the goods and services. Also the alternative to creating more public debt is to default. Lots of defaults occur every year, e.g., Argentina. The alternative to default is to print more money as does the U.S. Federal Reserve. The buying power of the U.S. Dollar has declined to less than 5% of its value in 1900 but we don't have Argentina inflation because the Fed prints money at the appropriate rate. Perhaps a model of the price of a share of stock from startup to going public to etc. would be useful. I am not taking issue with what you have done and declared. I am examining what happens when we use a modeling tool to tell a story vs. describe a system.

Gene: Jack I'd love to see a model of the price of stock from startup to going public.

As for your comment about using modeling to tell a story vs describe a system might you elaborate some as to how you see these being different along with your thoughts on the pros and cons of each. I arrived at storytelling as a way to communicate an understanding of what the model described... or so I thought...

Jan Lelie

In Physics I've learned to recognize the difference between an "observable" and a "system variable". (If you don't manage it, you'll never pass your exams) The first can be counted, irrespective of any observer, the second can only be calculated through a system of rules. For instance, my house, your house can be observed. You can count the number of rooms, inhabitants, ... . These observables always have a limit, are constrained.

The age of the house, has to be calculated. It depends on the assumption of a starting point (laying of the foundation? roof? key to the first inhabitant?). So "time" is a systems variable and not an observable. Also the value of an house is a system variable: it depends on the system "in use". It is not an attribute of the house, but an attribute of a relationship with the house. In The Netherlands, we used to say that the value of an house is "whatever a fool will pay".

A system variable comes in handy to describe, to model the behavior of observables. Using it, you can more or less predict the outcome of an experiment, which is always an observable, and thus verify the model. However, a model is not reality. And the system variable only exist in our minds. They are not real, nor unreal: they are surreal, a product of our imagination. System variables are not facts, they are fiction. (However, both words are derived from "facere", to make). Because they are fiction, they might have no limit, are not constrained to physical laws.

"Money" is a systems variable. We use it to calculate - usually called "costs". Money is also an observable, when we're talking about coins. They can be counted and measured - for instance in pounds or shekel. Now our imagination made an invention: why not relate the worth of something to the value of a coin. The number of houses is limited, the worth to its inhabitants also - you cannot live in two houses at the same time - but the value is not. (The value depends on three laws of real (!) estate: location, location, location. Location is real, value is imaginary) You can own a great number - but limited - houses. But their monetary value can rise without limit. Most people think they're a fool, because they didn't buy houses years ago.

The problem we have in understanding economy, is because the model is "flawed". (I could have tackled this directly from scarcity, that's how economist do it, but you can figure it out yourself). One of the most interesting system variables - in my opinion mind you -, is "meaning". Goods and services have a "meaning". And not only the goods and services themselves, also the money used in the description has a meaning. Money means status, power. You don't only buy an house, you also give expression to your authority, creativity and courage. It gives you a feeling of independence. Money represents "free" power, because you're free to spend it. Furthermore, all money is a currency and expresses a nationality, a belonging. (This is one of the hidden issues with the Euro).

The reason I used the very word "house" in this post, is because economy started out as "managing your house", in Dutch, "Huishoudkunde", the art of maintaining your house. Off course, "house" also indicates government - which is why we in The Netherlands speak about "geld": which is something like "legal". (Money, I read, is derived from "monitor", to overlook. It has been connected to the Temple of Juno, who is, you've guessed, the goddess of the household. Maintaining the household). And, last but not least, "house" belongs to the archetype of "self". And here is the fundamental flaw: you're part of the model you're using in describing your behaviour.

Gene Bellinger

@JanLelie I've read your post three times now and while I find it most meaningful I'm still trying to figure out how to relate it to the model that is presented in this perspective. Maybe you can help my cluelessness a bit?

Jan Lelie
Gene Bellinger

@JanLelie Thanks for the elaboration, and yes it's about power, which they tend to measure in money as it represents influence. Argyris is one of my heroes also.

Gene Bellinger

2017.04.01 David Steare: Surely crime (illegal and legal c.f. and mob activity generates as well as extracts money from the flow?

Gene: I completely agree.

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