January 5, 2026
A simple fact about economics that often isn’t taught or is misunderstood is the principle of equilibrium. There are two basic equilibrium identities: (1) income = expenditure (any surpluses in one area of the economy are from deficits in another)1 and (2) money = debt (the only way you get more money in the economy is by issuing more debt)2.
We are led to believe that innovation and entrepreneurial initiative create “value” that rewards the founders and venture capitalists by taking risk. But that extra wealth doesn’t come out of thin air. Instead, their invention, if successful, simply made some other part of the economy either spend more or go more in debt.
There are four major groups of players in the economy: households, government, businesses, and foreign entities. When one sector starts to become wildly profitable (like corporations currently are), it is due to deficits in other sectors. Our economy is now wired to have deficits in all three non-business sectors (households, government, and net imports instead of exports) which is creating record profits for corporations. Even inside the “business” sector, small businesses are struggling while the large corporations are booming because small businesses don’t have the same clout and competitive advantages as large corporations.
Think about all the things that we inherently know will help the current economic situation. Things like higher wages for middle income earners, more job opportunities, a healthier small business environment, more foreigners buying American products, a more reasonable level of government spending, balanced government budgets. Every one of things will make the corporate side of the equation worse, which is why they aren’t happening. Corporations have rigged the game in their favor, and they are benefiting big time. We are tricked into thinking that we need a strong corporate sector to “trickle down” to other parts of the economy, but that is completely false. A strong corporate sector only happens when all other parts of the economy are weak.
It is important for individuals to know this and start doing something about it. The first way to do something is to earn more revenue yourself. The more you earn personally, the more you are extracting from corporations. The second way is to focus on saving money and avoiding debt. The less you spend and the less debt you have, the more you are keeping funds out of the hands of corporations. Lastly, when you do need to spend, be a wiser consumer about where you spend that money to support small businesses and not corporations. Book through Equation Travel and start being part of the solution.
1 See two methods for calculating GDP: income approach and expenditure approach
2 See Credit Theory of Money