- Debt doubles approximately every 10 years
- The money supply doubles approximately every 10 years
- Productivity does not rise at the same rate
- Debt remains more or less stable relative to GDP
Therefore, it is clear that there is a structure of constant wealth transfer in a single direction.
Dt = D0 * 2^(t/10)
If nominal claims grow faster than real output, someone ends up paying for that difference.
All wealth shifts “toward the state”; it shifts toward the state–financial system–asset holders–early recipients of new money bloc, which also demonstrates that the state is merely a tool for that purpose.
If debt and the money supply double every 10 years, both grow at a compound annual rate of approximately 7.2%. But if real productivity does not grow at that rate, then nominal claims on the economy grow faster than available real output. That difference does not disappear: it is absorbed through inflation, future taxes, negative real interest rates, currency depreciation, asset inflation, or perpetual refinancing.
The mechanism of displacement would be as follows:
1- The state spends more today than it collects.
This allows it to appropriate present real resources: public wages, contracts, subsidies, defense, healthcare, bailouts, transfers, etc.
2- It finances the excess with debt.
That debt becomes an asset for whoever buys it, but a liability for present and future taxpayers.
3- The money supply grows to sustain the system.
If M2 grows faster than real output, it does not automatically create wealth: it redistributes purchasing power.
4- The first recipients of the new money win.
The government, contractors, banks, large corporations, financial markets, and asset owners receive or capture the new credit/money first. The last recipients—wage earners, cash savers, pensioners, young people without housing, small businesses—face higher prices before receiving equivalent income.
5- Asset prices rise before wages.
If new money enters the system through credit, public debt, financial markets, or deficit spending, it tends to drive up the prices of bonds, stocks, real estate, and scarce assets first. This benefits those who already own assets. Those who rely solely on wages must repurchase the same standard of living at higher prices.
quotingHistorically, M2 has roughly doubled every 10 years,
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