 compound interest. Here's a compound interest formula. How much money you've got is principal 1 minus rate of interest, the compounding period, Nt. Compounding period and time you're going to put in there. Notice formula comes in really, really, really handy. This applies in many, many different places. Now depending on which one of these things you have, a bit of information you have and what you're trying to solve for, you can just use simple algebra, basic algebra. You need exponents or you have to go into logs if you're looking for compounding period or time. But let's do lay down the problem a little bit initially. Not bad. So check this out. Let's assume you make $150. So this is you. You earn $150. That's what you're earning. I'm making the simple numbers. You have to pay tax at 33%. That means a third of your income goes towards taxation. So after tax which equals $150 times 0.33. Let's make this tighter so it all fits. Tax at 33% which equals $150 times 0.33 which equals $100. Approximately. Let me make sure it's into the right range without rounding where we end up with rounding if I just go to two decimal places. $100.5 We'll just say $100. So you get $100 left over. The guy says I do this math every week. You got $100 left over. Let's write this out. $100 left over. Sorry. This ends up costing you $50. After tax you got $150 minus $150 you get $100 left over. That's how much money you're making. Let's say you go out and spend your $100. Sales tax. I don't know where you guys are. In my part of the world we've got two different types of taxes here. We've got provincial tax and federal tax. We've got up to 15% tax in general on things that you're buying. Some things don't have PSTs but it's safe to say most of the things you're buying you're paying around 15% tax. What's the tax rate in your location if you're buying goods? What are you guys paying in general? Because I want to use a base number. I know in Canada it's fairly high but I think some other places are pretty high as well. I mean Scandinavian countries is very high. I think it's higher than Canada. Canada is one of the highest places. So I don't want to go with the extreme. I want to go with what the consensus is. Do you guys pay like 10% tax when you buy stuff? 8% 15% like we do? What do you guys end up paying? Would it be average tax? No I'm not going to look up average tax. We're going to go with 15%. Yours is 20% in the UK you guys pay 20%. When you buy stuff damn that's high. Apparently sales tax in Bhutan is 50%. So 15% is on the low end of you guys. 6.5% local sales tax here. J-Paw You must be in the States. You guys have state and federal in the States as well when you buy products. And in Alberta they don't have any provincial certain things. They pay less than we do. Let's stick with 15%. Let's assume 15% tax. 15% tax paid. Pay 15% tax on purchases. Let's put it that way. You pay 15% tax on purchases. Pay 15% tax on... Should we do a table? Let's do a table. Figure out because this $100 is in circulation. This is how much productivity you put into the system. You created $150 worth of $150 of energy into the system. If you have your own business or you got your corporation and you're working for and if they're profitable then this is how much you put in. But they end up getting more out of it because they're taking $150. Let's say you get paid $50 an hour. It took you 3 hours to make this thing. So you got paid $150. But the company that sells this thing sells it for $200. So you're $150 hours. The system turned into $200 for a corporation. But you get taxed. You got taxed $50. You get to take home $100. I'm moving to Canada for that extra 5% and it can also fight in tyranny as well. Also, you're welcome to join us Aldergan. Now you only have $100. Let's make a table. $100. You go out and spend $100. You get 15% taxed. That means you got $85 is left in the economy in the circulation because $15 of that government. They came and took $15 of that money. So not only did you pay 50% income tax. So out of $150 that you earned, the first purchase you make without $100, you only got $85 of it. Real buying power because 15% went to the government. Now someone else takes this money $85. And when they do a next purchase, that's again 15% tax. So $85 times 0.85 really. That means $72 $72.25 is back in the economy. $12 and $75 went to the government. More. Now take that $72.25 the next person that buys something pays 15% tax. So let's just multiply this by times. Let me reset it. $72.25 times 0.85 which is what is remain. Now there is $61 and $41 $41.41 left. That means the government $72.25 the government took another $10.84 $10.84 You continue this. At the end of the day, how many circulations is it going to take for this thing to reach zero? For the government to have taken all $100 of your worth what you generated. So out of the $150 the initial tax you pay is $50, you get $100. You take your $100, you spend it in the economy. Now there is only $85 of money left in the economy because 15% of it went to the government. That $85 by the way, if a company is making this or a person is making this as an income, remember at the end of the year the government is going to take a chunk of this income tax as well. This is the bare minimum that's happening. Because every time there is changing of hands that gets put into the ledger and if a company or a person is making profit of that the government comes and says give me more money. So this is bare minimum assuming nobody is making a profit. Just by spending your money in the system every time you spend it the government gets a piece of the pie. Until you add all these up. So after three iterations, one, two, three, three times add these guys up. Let's add them up. Just doing some fun mental math. Just because what's happening is taxes are going to go up. Interest rates about to go up and people are about to pay a heavy price. So after three times of your original hundred dollars being used in the economy another 38 dollars of it 38.59 of the hundred the government has taken. That's not 38% of the original hundred that you got back because the government took a third of it with. Wow. Wow, wow, wow. Now we can use a compound interest formula to figure out how much money would be left. What should we use? Let's see. We're not going to use time and actually we're not even going to use the compound interest. We can use simple interest formula I equals PRT Is that simple interest? I is equal to PRT. Simple interest. Principle rate time interest that you pay. No, we don't even need to use that. We can use the compound I guess. Sure. Let's see. And the end we're just going to leave as one. And T would be the number of times that we're doing transactions. This could be first year, second year, third year. No compounding here. This formula reduces down to A is equal to P1 minus R to the power of T. The way this works is because we're not going to compound it. There's nothing you're paying in the middle. We're going to assume. How much money is left? Let's say we go through 10 iterations of this. Your original $100 if you keep one minus 0.1% which is the interest that you're going to be paying per transaction. Let's say you do it 10 times. This is once, twice, three times. Let's say you do it 10 times. Let's see how much money is left. And then what we can do is calculate how much money, when do we reach zero after how many iterations. And by the way, this occurs on every $100 someone earns. Your next $100, you get $15. You don't have to get on the first spend. As your principal decreases, the interest that you're paying reduces as well. In the end, this graph just looks like this. It peeks down. This would be 0.85 Let's say to the power of 10 0.100 So after 10 times of spending of your original $100 going through 10 transactions there's only going to be $19 $19.65 left. And keep in mind the last 5 iterations or 6 iterations there's less and less taxes being taken off because this principal is a lot less. $19.69 $19.69 That's something to keep in mind. I just thought it was worth putting this out there because this is something that we're going to have to start thinking about as interest rates kick up in the world because they're about to be unfortunately. We see, we see We see, we see As my friend says, spending money to finance your destruction spending money to finance your destruction indeed crazy times. And this is bare minimum bare minimum We need to as a society do something about this and those in power are working towards getting a bigger chunk of this. Because what's going on right now is a lot of centralized institutions are getting together and saying you know what we need to tax society more because we need better carbon footprint. We need to become environmentally better. We need to prepare for whatever else is coming down the pipe. We need to collaborate and a lot of the politicians be across their power that are imposing this stuff this theft this theft a lot of those people have not been elected, they have been appointed and a lot of those people are not the best of us but they are the worst of us because a lot of it comes through centralization of power and the one thing we have learned throughout history, human history is centralization of power at least to complete corruption. As the saying goes absolute power corrupts absolutely and when centralized institutions are given absolute power over our capital, our productivity then that absolute power has been corrupted absolutely. I thought this was important to put out there just so we can relate the mathematics into everything else that we've been doing and we will talk a lot more about this stuff in the future but we go baby steps