All economies that are set up as "showing a profit, each new year".... are eventually going to fail.
This is because yearly "profit margin" economics can only be maintained by raising prices that are related to dealing with inflation that is driven by "profit margin" mania.
So eventually, all companies hit a situation where their products have so saturated the market and have continued to increase in Price over time, that the consumer buys the same from the smaller "NEW" company that is offering the same product for less.
All "new" companies are clones of Larger established companies. And because they are new, they have less overhead, less staff, less insurance to cover, so for a while they can make a lot of money. But eventually they become too large, too profit margin driven, and they become the same situation as the company they Cloned.
My college economic text, and my Japanese economics instructor, both claimed to be teaching Keynesian economics, and basic principles of supply and demand from Adam Smith (
The Wealth of Nations - 1776). That's not really the type of economic system the United States has though, not since the New York banking elites took over control of U.S. monetary policy.
The banking elites even during the administration of Andrew Jackson sought to get control of U.S. monetary policy by eventually printing fiat paper money instead of staying on a gold standard. The NY banker Nicholas Biddle tried to politically destroy President Jackson through slander because Jackson wouldn't renew the national bank charter which created political control by bankers. Jackson was against the political control the bankers were trying to establish which had no Congressional oversight. Jackson knew what the bankers were up to and pushed for keeping the U.S. on a gold standard policy.
What ex-chairman of the board of the Federal Reserve, Alan Greenspan, said about the gold standard vs. the welfare statist's fiat paper money system, in later years after he retired he said he still believing in a gold standard:
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"Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of society lose value in terms of goods.
When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds finance by bank credit expansion.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods.
The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard."
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The Federal Reserve policies slowly reduced the U.S. on the gold standard, making ever smaller fractions of gold and silver backing the U.S. paper dollar until in 1971 President Nixon allowed the Feds to take the U.S. off all gold backing of the dollar. In April 1933, all U.S. citizens were ordered by the President to turn in all their gold to the Federal Reserve bank. Andrew Jackson was right; he knew what the bankers were up to, a plan to steal the people's wealth!
In 1913, the U.S. government ratified the 16th Amendment to begin the progressive income tax on U.S. citizen's personal income. Prior to that, no U.S. citizen paid taxes on their personal income. 1913 was a great year for the banking elites and their paid off politicians in Washington, D.C. It was when the Federal Reserve Act was passed, and also when the progressive income taxation legislation was passed. The Fed created the Fiat dollar system where the dollar begins as a debt paper, a credit paper the U.S. government sells with a promise to pay, with interest, which they back by getting the funds out of the people's pockets through taxation! Since the U.S. dollar was to eventually be totally off the gold standard, they switched its backing to directly out of the people's pockets through the progressive income tax, and inflation.
Today's Fiat money system isn't that difficult to understand in light of it compared to the gold standard backing of the U.S. dollar. With a gold standard backing the dollar, the dollar's purchasing power is stable, everything else changes (like prices of labor and goods). That means the 'buying power' stays with the people, as their financial decisions is what influences prices through supply and demand. Got a bunch of widgets in the warehouse that aren't selling? Best make something the people want or need, or go out of business. The prices move up and down to reflect the people's consumer habits and needs. The bankers and politicians couldn't control a system like that, because the financial power was in the people's hands instead of theirs.
What the Fiat system is, is a creation of money 'out of thin air', not backed by anything except the U.S. government's promise to get the backing from the taxpayer's pockets. The word 'fiat' simply means a decree, like a king decreeing a certain policy. There's a finance reserve system setup by the Fed based on the old goldsmith rule of keeping a certain amount of gold reserves in the safe while lending out the majority of it, the main principle bankers still use today, and the Fed requires they keep a certain percentage in their vault called 'reserves'. This system allows the U.S. commercial banks to make bookkeeping entries to the good, creating dollars out of thin air, with every dollar from loans that are paid back to the bank. If average Joe citizen were to do that it would be called counterfeiting. This operation the Fed allows, is one of the greatest causes of the inflation of the U.S. dollar. The other great cause is bailouts, the Fed through Congress getting the Treasury to simply print up billions of dollars to pay off illegal debt, like what was paid to Wall Street bankers to cover their 'known' bad mortgage loan speculation (actually gambling debt). The Wall Streeters bought new mansions, sports cars, cocaine, prostitutes, etc., and when it was all over, they petitioned Congress to bail them out, threatening that it would destroy the U.S. economy if they were allowed to just go bankrupt, which is why the banks try to become as huge as possible in affecting the U.S. economy. They know that creates a pry bar against Congress to bail them out if needed. Who pays for their debt? We do, the U.S. taxpayer, through inflation of the dollar, which means a reduction of the buying power of the U.S. dollar.
The system doesn't stop there though, the politicians also use this Fiat bailout strategy to prop up whole foreign governments. The banks are directly involved in those loans to foreign countries. Interest income on loans afterall, is how the banks make their money. (Their being allowed to create money by a bookkeeping entry produces more opportunity for loans.) A poor foreign country will be given billions of dollars to get their economy, military, etc. going. And when that country needs help again, the bankers simply offer them a re-finance, politicians sending an order to print off more dollars to give them, the bankers handling the loan which charges interest, and the cycle perpetuates. Each time this happens, it reduces the buying power of the U.S. dollar through inflation of the dollar (throwing more dollars in circulation).
A good read on this is
Creature From Jekyll Island by G. Edward Griffin.