Simple economic question: If government is heavily in debt, but has never had trade..

Other than getting 8.24= 14,000/1700 as the relevant multiplier figure most of what you are saying makes excellent sense but the multiplier is not leverage. Leverage is bank capital divided into bank assets of reserves, assets (loans) and buildings and equipment.

The money supply does not have to offset real deflation such as Moore's law still in real terms deflation rules but the human brain has trouble understanding it. Let's say you currently own 1/1024th of the world's computing power if Moore's law holds then in 22 years despite inflation you will be able to buy this year's sum of computer power at the nominal cost of your current IT capital budget. Even the people at Intel who developed Moore's law can't get their brains around this result. Adam Smith had the same problem understanding the steam and textile revolution of his time. Since 1453 the information explosion combined with the spread of American foods has made all extrapolations fail.

The average poor American today has a material life-style that exceeds what the emperors of 1600 had but they still feel poor. By 2100 most of Africa will have lifestyles comparable to current American standards and they will still feel relatively poor. Keep the currency constant or slowly growing and they will really feel poor because their wages will decline and even loan sharks will have trouble collecting on more than 4% annual interest. The money illusion (the technical term for this problem) is alive and well and people still look at their cash and bank balances to determine their wealth. That $5 then will buy what $5 quadrillion would buy you now (not a joke 2x45E does take you into the quadrillions) does not matter it will still feel poor. Just a quirk of human neurology.
 

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