Photon Guy

Lets say you're driving a car, as you're doing so you're converting energy into lots of different forms. The energy starts out with the gasoline in the gas tank. The gasoline has chemical energy. As the gasoline burns the chemical energy is released and converted into kinetic energy as it drives the pistons. The pistons turn gears which turns the crank shaft which finally turns the wheels that sends the car forward. Now each time the energy is converted some of the energy is lost. When the gasoline burns not all of the energy it gives off goes towards driving the pistons, when the piston turns the gears not all of the energy goes towards turning the gears. When one gear turns another gear not all of the energy goes towards turning the other gear, when the gears turn the crankshaft not all the energy goes towards turning the crankshaft and wheels and so forth. Energy is lost in the form of heat and friction. That is why engines get so hot and need cooling systems, because of all the energy that is lost as heat which heats up the engine. So anyway, I see something similar with the economy and with money. Whenever money switches owners some of it is lost, it is lost in the form of taxes. Lets say you buy a pair of shoes, money goes from your pocket to the shoe store and in exchange you get this nice new pair of shoes. When you buy the shoes in addition to the price of the shoes you also pay sales tax. So not all of the money you spend on the shoes goes to pay for the shoes, some of it is lost in the form of taxes. If you work a job where you're paid an hourly wage you pay income taxes on the wages you make. So not all the money that goes from your employer to you per hour actually goes to you, some of it is lost in the form of taxes. So this is what energy and the economy have in common.