# Problem of the Origin of the Profit

#### James Smith 143

Hi, I have written a small paper on economics. Basically I claim that in an economy with fixed amount of money, no monetary profit is sustainable, therefore the government has to print new money and from time to time inject it into circulation. Also I show in my work that banks don't create new money as people say.
Here it is: my work .

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#### James Smith 143

Take a look at this example:
Let’s say we have a scenario of a single person living on an isolated island, let’s say his name is John. This person decides to open a firm that will plant coconut trees and collect the harvest. John is the owner of the firm, but he also registers himself as the only employee. He decides to pay himself a monthly salary of 120 dollars.
Now each month John manages to grow and collect 120 coconuts.
Now John’s firm has a monthly expenditure of 120 dollars.
So the firm must set the price at least 1 dollar per coconut in order to break even. With this price John will be able to purchase 120 coconuts. Now let’s say the firm decides to make a monetary profit, and decides to sell coconuts for 2 dollars. Now John can only purchase 60 coconuts… So each month the firm pays John 120 dollars, produces 120 coconuts, sells 60 coconuts to John for same 120 dollars and it still has the remaining 60 coconuts.
So each cycle the firm makes profit in form of 60 coconuts, but it doesn’t make any monetary profit. In fact, no matter what price the firm sets, it can never make a profit in form of money, only in form of excessive coconuts that John wasn’t able to purchase.

So as you see there is no monetary profit possible. The firm can't accumulate money. Coconuts? Yes. But not money.
So you may think that if we keep adding people and firms, some how magically monetary profit will become possible, but no, it's not. And I prove this in my work.

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#### James Smith 143

If moderators have any problem with the link I posted then tell me... I am not getting paid for visits by that website. I have no problem to post this work here if it's possible, and remove the link... but that work is like 40 pages long.

#### skipjack

Forum Staff
The link should work, and your example here seems okay. I'm not an economist, but your assumption that the amount of money is fixed doesn't seem realistic.

#### DarnItJimImAnEngineer

I don't understand the setup. Why would the owner of a coconut farm, or even an employee, be buying coconuts?

I clicked the link and saw you had a multi-firm model, but for some reason I couldn't see your tables. They appeared as images that wouldn't load.

#### James Smith 143

The link should work, and your example here seems okay. I'm not an economist, but your assumption that the amount of money is fixed doesn't seem realistic.
I have no assumption that the amount of money is fixed... what i'm saying that it shouldn't be fixed because of people making monetary profits.

#### James Smith 143

I don't understand the setup. Why would the owner of a coconut farm, or even an employee, be buying coconuts?

I clicked the link and saw you had a multi-firm model, but for some reason I couldn't see your tables. They appeared as images that wouldn't load.
It's a theoretical example of one man one firm scenario. You can replace "coconut" with anything you want, it doesn't matter.
BTW anyone else experiencing this problem of not being able to see images on the linked website?

#### skipjack

Forum Staff
I see what you mean, but there's nothing to prevent coconuts being used to barter, which would have the effect of coconuts becoming money. Money becomes "official" by virtue of laws that prohibit its unauthorized manufacture.

#### James Smith 143

I see what you mean, but there's nothing to prevent coconuts being used to barter, which would have the effect of coconuts becoming money. Money becomes "official" by virtue of laws that prohibit its unauthorized manufacture.
you right... but that's the thing, since the government is the only body that is authorized to print it, then we have a problem. The government is not clear when it decides to print new money, and this whole thing is very mysterious... and since the official position of the government is that money from thin air is not good... so how and when they decide to create new money?

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