| this isnt really right. Lets assume the product that B makes has a value which allows a 50% gross margin A loans $100K cash to B at 10% markup (total value of system= 100K) B buys raw material from A for 100K cash (total value of system now 200K as a magic 100K of raw materials were just added) B creates product X and Y, now worth 200K (system is now at 300K) A buys 60K of product X with cash (doesnt change value of system) A cannot buy 60K of product Y with cash, though the total value of the system has increased. There isnt enough cash in the system to settle all debts, but the total value of the system has increased. Cash would need to be printed to cover debts. Fiat currency to some extent is balanced against the total GDP of the US. |