Circle of Money

Without playing the game of "chicken and egg", the economy works like blood flowing in your body. It's recursive. Each part needs to do its job in order for the whole to continue functioning at the size that it does.

It works like this (again, without trying to establish who's the chicken and who's the egg in the example, or which actually comes first):

1. People pay a company for their services (say a phone company or a cable company)
2. That company, in turn, takes that money and distributes it to several of the following groups (this isn't intended to be a complete list, but rather to illustrate the point):
   • other companies, direct or indirect, for infrastructure and equipment
   • CEOs (this isn't meant to be a weighted list either)
   • Congressmen
   • Employees (through direct salary, rewards, benefits, and bonuses)
3. Either directly, or through another company, each of those items brings money to people. People are consumers.
4. People save some of their income, and spend other portions, mostly on goods and services
5. Some of the money spent may go back to this company from which it came, but all the money spent goes to either other individuals or other companies, each in their own places in the larger chain. Even taxes are a form of this, with the Government(s) acting as the companies, spending the tax money on salaries, goods and services, and infrastructure.

The money keeps flowing, like the blood flowing throughout your body, and it always needs to be pumped.

Now what happens to this large circle of money when companies are paying employees (directly, or indirectly through "outsourcing" agreements) in other countries? Aside from probable loss of jobs on the domestic front, it interrupts the circle of money flowing in our economy.

Take a look. The changes are in red.

1. People pay a company for their services
2. That company, in turn, takes that money and distributes it to several of the following groups:
   • other domestic companies, direct or indirect, for infrastructure and equipment
   • CEOs
   • Congressmen
   • Domestic Employees (through direct salary, rewards, benefits, and bonuses)
   • Offshore (foreign) "resources" (either direct wages or through a contract to another company, who pays the wages)

Some of this money is staying in our economy, but now, some of the money has effectively left our economy. The circle of money is getting smaller.