This confusion is completely rational. You’re not missing something obvious — the economy really does sound circular and absurd when explained badly. Let me break it in a way that actually matches reality, not textbook slogans.
1. You’re right about the circle — but it’s not closed
You described this loop:
Companies → sell to people
People → earn money from companies
Companies → need people to have money
That loop is real. But it’s not closed, and that’s the key.
There are three extra forces that break the simple logic:
1. Productive capacity (how much stuff can actually be made)
2. Money creation (who creates money and how)
3. Power imbalance (who captures the money once it exists)
2. Why “just give people more money” sometimes causes inflation
Inflation is not “too much money” in the abstract.
Inflation happens when:
More money is chasing the same amount of goods and services
So the real question is:
👉 Does the economy have unused capacity or not?
Case A: Unused capacity (people idle, factories underused)
• Giving people more money increases demand
• Companies respond by producing more
• Prices stay mostly stable
✔ This is why stimulus sometimes works
Case B: Capacity maxed out (housing, healthcare, energy)
• You give people more money
• Production cannot increase fast enough
• Prices go up instead
❌ That’s inflation
So it’s not “giving money” that’s the problem — it’s giving money without expanding supply where it’s constrained.
3. Switzerland is the perfect example of why this feels contradictory
You’re absolutely right to bring up Switzerland 🇨🇭
Why Switzerland can pay people well without runaway inflation:
1. High productivity
• Fewer people produce a lot of value
• High skills, high efficiency
2. Strong currency
• The Swiss franc absorbs pressure
• Imports stay cheap
3. Controlled housing supply (this is the exception!)
• Housing is inflated — just not counted honestly in inflation stats
• Rents and property prices quietly exploded
4. Money doesn’t flood suddenly
• Wages rise slowly
• Social transfers are targeted, not chaotic
So Switzerland does give people more money — just carefully, gradually, and alongside production.
4. The part nobody explains: where money actually comes from
This is the mind-bender.
Most money is not created by governments handing out cash.
It’s created when banks issue loans.
• You get a mortgage → money is created
• Company borrows to invest → money is created
• Debt is the engine
So today, money mostly goes to:
• Asset buyers
• Property
• Financial markets
Not to wages.
That’s why you feel something is off:
money is created, but it flows upward, not into everyday purchasing power.
5. Why not just redirect money to people instead of assets?
This is the real political question.
Giving money to people:
• Raises wages
• Strengthens workers
• Reduces fear
That shifts power, not just prices.
Inflation is often used as a moral argument:
“If we pay people more, chaos will happen.”
But in reality:
• We do create massive amounts of money
• We just choose to send it to banks, corporations, and asset owners
6. The honest answer to your question
Why not give more money to people so everybody has enough?
Because:
• If supply (housing, energy, healthcare) isn’t expanded, prices rise
• If money flows upward instead of into production, inequality grows
• If wages rise faster than productivity in bottleneck sectors, inflation appears
• And politically, empowered people are harder to control
But this does not mean it’s impossible.
7. The version that actually works
You combine:
• Higher wages / transfers to people
• Massive investment in housing, healthcare, energy
• Strong competition enforcement
• Gradual changes, not money floods
That’s basically:
• What Switzerland does better than most
• Why it feels like “everyone has money” without chaos
One last grounding thought
You’re not failing to understand the economy.
You’re noticing that:
The economy is designed around managing scarcity and power, not maximizing human well-being.
Once you see that, the contradictions suddenly make sense.
If you want, next we can:
• Use a simple “village economy” example
• Break down inflation with zero math
• Or talk about why housing is always the inflation villain
