Draw a complete path or circle around wat you want to consider and then do a balance sheet about what and how much and what type of money transferes across the line or boundry.

For simplicity, the area outside the circle can be viewed in a simle fashion and often the small amount that comes in and goes out can be viewed as a sort of sink or source and one does not have to keep track of the small effect the exchange has on the overall system except for the rules of exchange. In this form, money inside of the path can be viewed as being distroyed or created at the border. for example, if I do work and get money from outside the border, I can assume that the same amount will come in each time I dod the same work and this amount does not change the source’s ability to pay me. By the same token any money that leaves the inside can be seen as a loss if it does not bring in something of use. In this way, lost efforts or broken items that must be replaced can be seen as the distruction of the money and money waisted.

The is different for money that stays inside the border where it simply moves from on place or set of hands and anothers and if the money is accumulated, inside the circle we can see this and take action.

Where this is important is when we look at the governements budget and wars and other expenses. We are often told that the governement waistes money or looses it which is factually and realistically wrong. What has happened is that the money is transfered from one set of hands to anothers. NO ONE IS BURNING THE MONEY, what is happening is that the money is making someone happy and someone sad or hurt.

We must look at the exchange in full. For the U.S. the money spent on a stupid war is often seen as a loss or waisted resource, and it is for thse who dont view the full picture. When the full picture is taken in what has happened is the money went from the hands that might have used it for something productive as they see it – into the hands of those who will do something differnet with it – like buy power and influence and politicians who then spread that money to others. No money is distroyed or lost – the moeny has simple done other things that might solidify the power of a certain group more then if they did not get the money. Money is transfered not distroyed.

I have a model for understanding economies that is very good. I saw it first in a 2002 American Scientist piece and from that one small model one can get an idea about how various wealth distributions happens and how those distributions can be limited or controlled and what happens when they run open loop.

here is the link:
http://www.americanscientist.org/template/AssetDetail/assetid/14769

America Scientist
September-October 2002

Volume: 90 Number: 5 Page: 400
DOI: 10.1511/2002.5.400

COMPUTING SCIENCE
Other Formats: Postscript Postscript (gzipped) PDF
Follow the Money
Brian Hayes

He did another piece or two related to roads and traffic and choices that was illumnating also but I don’t have that link at hand. One can do a search and discover that and other links.

Whats fascinating about “Follow the Money” is the explaination of how fraud can stabalize a system from the collapse of singulatirites that can happen. I don’t like fraud as a solution but his description of how it stablizes a system gives an understanding why it evolves when other more fair controls to wealth accumulation are not inplace.

As an engineer, one of the concepts important in understanding a system with feedback is the concept of phase or time delay. Somthing that can provide some stabalization of it feed backs fast might produce distructive results if the time delay or phase is shifted.

too late here to say much more – joe m.