Wealth Is Only Transferred – Not Destroyed
Wealth is much like matter; one can change the form of it but it cannot be destroyed.
Without going into complex chemical equations I will use a simple illustration showing how matter is changed only changed and not destroyed in a chemical reaction. I will use the burning of natural gas (methane) as an example.
Changing the Form of Molecules
Natural gas is made up of one part carbon and four parts hydrogen (CH4) and is found in abundance in the US and many other countries of the world. It can also be produced from almost anything organic. When burned in a furnace or in an automobile as a fuel, it combines with two parts oxygen and gives off heat, carbon dioxide (CO2) and two water molecules (H2O). Matter was not destroyed in the reaction it only changed from CH4 to heat, water and carbon dioxide. All atoms are accounted for and we got a benefit of heat.
Let's compare this chemical reaction to wealth.
Transfer of Wealth
Wealth is held by individuals, corporations and governments. Individuals get their wealth by working, stealing or begging from the government. Corporations use the labor of individuals combined with investment capital to produce goods and services that will turn a profit when sold to others. Governments on the other hand obtain wealth almost exclusively through taxation of individuals and corporations.
Individual Wealth Transfer
The transfer of wealth happens in a simple way; for the individual it happens as he works harder and smarter for a bigger paycheck, hence the transfer of wealth from the corporation to the individual. He then spends his hard-earned wealth at the local gas station, food store or department store in exchange for goods and services produced by the corporation, thus transferring the wealth back to the corporation. And the cycle starts all over again.
Corporate Wealth Transfer
This same transfer of wealth takes place in corporations. Stockholders provide capital in the form of cash (transfer #1) to get the corporation started. The corporation spends the capital on inventory and machinery (transfer #2), hires and pays workers (transfer #3), sells goods and services to others (transfer #4), pays dividends to shareholders (transfer #5) and pays taxes to the government (transfer #6). During all these transfers, the same amount of money exists but is only shifted from one entity to another.
Government Wealth Transfer
Transfer of wealth with respect to governments is where things get really complicated. Governments produce nothing, control almost everything and are the biggest hoarders of wealth on the planet. Everyone is affected by the spending, taxation and distributions of governments. Governments defy the law of nature by printing their own money when they have overspent their checkbooks (think Federal Reserve). This is something we must understand or it will eventually destroy the economics of the individual.
Remember, wealth is not destroyed it is only transferred.
As governments tax, they take your money and the money of corporations. They consume that money on social programs, defense and employee payroll. When they overspend, borrow and PRINT more money INFLATION occurs. This is form of hidden taxation and is the transfer of wealth from the individual to the government. While the government is not collecting a direct tax, it is paying its debt with currency it inflated by borrowing and by printing more money.
While it may appear as if the government has created money out of thin air by borrowing and by printing, it has merely transferred YOUR WEALTH to them using a cute little method called "inflation!" Inflated (fiat) money is worth less so the wealth YOU hold is magically transferred to the government to cover its debt. That money they printed was actually transferred from you to them without you even knowing it!
Simple, huh?
Without going into complex chemical equations I will use a simple illustration showing how matter is changed only changed and not destroyed in a chemical reaction. I will use the burning of natural gas (methane) as an example.
Changing the Form of Molecules
Natural gas is made up of one part carbon and four parts hydrogen (CH4) and is found in abundance in the US and many other countries of the world. It can also be produced from almost anything organic. When burned in a furnace or in an automobile as a fuel, it combines with two parts oxygen and gives off heat, carbon dioxide (CO2) and two water molecules (H2O). Matter was not destroyed in the reaction it only changed from CH4 to heat, water and carbon dioxide. All atoms are accounted for and we got a benefit of heat.
Let's compare this chemical reaction to wealth.
Transfer of Wealth
Wealth is held by individuals, corporations and governments. Individuals get their wealth by working, stealing or begging from the government. Corporations use the labor of individuals combined with investment capital to produce goods and services that will turn a profit when sold to others. Governments on the other hand obtain wealth almost exclusively through taxation of individuals and corporations.
Individual Wealth Transfer
The transfer of wealth happens in a simple way; for the individual it happens as he works harder and smarter for a bigger paycheck, hence the transfer of wealth from the corporation to the individual. He then spends his hard-earned wealth at the local gas station, food store or department store in exchange for goods and services produced by the corporation, thus transferring the wealth back to the corporation. And the cycle starts all over again.
Corporate Wealth Transfer
This same transfer of wealth takes place in corporations. Stockholders provide capital in the form of cash (transfer #1) to get the corporation started. The corporation spends the capital on inventory and machinery (transfer #2), hires and pays workers (transfer #3), sells goods and services to others (transfer #4), pays dividends to shareholders (transfer #5) and pays taxes to the government (transfer #6). During all these transfers, the same amount of money exists but is only shifted from one entity to another.
Government Wealth Transfer
Transfer of wealth with respect to governments is where things get really complicated. Governments produce nothing, control almost everything and are the biggest hoarders of wealth on the planet. Everyone is affected by the spending, taxation and distributions of governments. Governments defy the law of nature by printing their own money when they have overspent their checkbooks (think Federal Reserve). This is something we must understand or it will eventually destroy the economics of the individual.
Remember, wealth is not destroyed it is only transferred.
As governments tax, they take your money and the money of corporations. They consume that money on social programs, defense and employee payroll. When they overspend, borrow and PRINT more money INFLATION occurs. This is form of hidden taxation and is the transfer of wealth from the individual to the government. While the government is not collecting a direct tax, it is paying its debt with currency it inflated by borrowing and by printing more money.
While it may appear as if the government has created money out of thin air by borrowing and by printing, it has merely transferred YOUR WEALTH to them using a cute little method called "inflation!" Inflated (fiat) money is worth less so the wealth YOU hold is magically transferred to the government to cover its debt. That money they printed was actually transferred from you to them without you even knowing it!
Simple, huh?
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