Funding profits etc.

Industrial profits could be either unpaid added value, or just value added to the cost price. Commercial profits are value added to the cost price. And interest is also value added to the cost price. All three forms of profit demand that more is paid out than is put in. and the only way this extra value can be obtained is plunder, credit and debt. This is problematic enough, especially when incomes are static, but then the government adds on VAT to all consumption. Value added taxes (sales tax in the US) are an over-profit that can only be paid by even more plunder, credit and debt.

Profits, interest and VAT are unfunded expenses that can only be paid with debt. And as the debt grows, so must the debt to pay the growing interest. When debt growth slows down, its division between profits, VAT and ever increasing interest becomes impossible, so someone must lose out. Governments can reduce taxes and profits can fall but, when debt growth stalled in 2007, it was interest that suffered as central banks pushed it down to almost nothing. This was unfortunate for banks and all those who depended on interest for income. But VAT was maintained and profits could grow, while low interest encouraged a lot of new borrowing.

The unfunded value that is added to production costs can only be paid with debt. As that debt cannot be paid back without stopping the whole process, it just piles up along with the interest. At present, most developed nations owe two or three times their national income. Multiplied by the rate of interest, that represents a considerable percentage of GDP. A sum that must in turn be borrowed to keep the system going. And that system (profit capitalism) is on the verge of a gigantic crash.

For more on this see previous posting:

https://lelezard.blogspot.com/2017/11/bubbles-galore.html