Me:  There are other additional costs besides depreciation, but it is the best and most glaringly obvious example of why an increasingly capital intensive economy is inherently cost inflationary. If a business borrows $1 million to start up and build its plant and means of production and that plant and productive capability costs $600k, then as such concrete assets depreciate it is going to have to garner $1.6 million plus profit, plus interest, plus other miscellaneous additional costs…..and yet there has only been a total of $1 million dollars distributed….with which to liquidate all of those costs. Virtually every enterprise faces this same conundrum of a scarcity of total individual incomes in ratio to total costs/prices and so the flow of that ratio is a basic macro-economic instability. Of course we can keep things going for a season by borrowing more and more money which the Banker is happy to do, but that only enriches him and ends us up in the mess we’re currently in. And innovation and AI are extremely disruptive aggregate monetary deflationary forces that are really just getting started to boot.

Integrating monetary Gifting into the debt based money system with a universal dividend to everyone 18 and older is the only valid and effective way to equilibrate cost/prices and individual incomes, and a retail discount placed at the proper place in the productive process (retail sale) is the only means of eliminating both demand pull inflation and (if we’re smart and economic as in efficient) making actual price deflation the trending reality.

Crysangle:   I find your example confusing as you seem to count the cost of building the plant twice.

Me:   Crys,

There is no confusion. Productive means wear out, require maintenance and/or become obsolescent and all of these costs must be paid for by businesses or it will stop producing and go out of business. And of course every business must calculate and save for these realities by including them in their prices, or again…go out of business. Staying in Business is incredibly difficult especially for the small to medium sized variety. The inherent individual income scarcity makes the system unnecessarily unstable and austere to the point of onerousness for both business and the individual, and Austrianism, libertarianism and conservatism play into that condition instead of making the system humane and graciously flowing as any human system whose point must be that it serves the individual, ethically should be. This is why those who always grouch about entitlement, “free lunches” etc. etc. ad nauseum are actually unconsciously working  (no matter how much they might claim to the contrary) for further Bank dominance and an eventual socialism or fascism. They miss/refuse to look at the inherent scarcity of total individual incomes in ratio to total costs/prices and at the only valid economic way to resolve the situation.

Ron J:  A cycle has two phases. The system is inflationary and deflationary.

Me:  “A cycle has two phases. The system is inflationary and deflationary.”

Precisely. But understanding the ACTUAL reason for the inflationary cycle is key to resolving the instability of the system and avoidance of harmful deflation. As I have been pointing out my policies would enable beneficial and humane price deflation within increasingly profitable profit making systems.