How is the ‘first dollar’ then created? In order to buy the knife, that knife thrower must have to generate income from some other source or be extended credit by the knife maker. That is what I find difficult to get my mind around. Or is it a moot point?

The ‘first dollar’ definition is better backed into by thinking of the second, third, fourth, etc….dollar.

As an accountant in a manufacturing firm, I am paid with with the second dollar. As an accountant for the accounting firm that does the tax return or audit of the mfg company, I am paid with the third dollar. As we get further and further away from the first creation of the dollar, the value provided diminishes substantially and can be secured from a greater variety of sources and competition.

But without that first dollar, there are no other dollars needed since there is no enterprise.

It seems that what is needed before any other is the conception of a business. An attorney has no work unless there is company with a need for his services. Like wise with all the other ‘parasites’ living off the host including all suppliers, employees, stockholders, etc.

Is there a better model of an economy by thinking of it as an ever-expanding (or contracting) circle, a flow of global money that is nipped at along the trajectory of the arc by any and all able to finagle a claim on it?

The more value that is created, the more money available for investments. As investment quality is inversely proportional to the money available for investment, value backed by investments become weaker as prosperity i.e. value creation increases. Eventually the weak investments implode and value is destroyed. What is destroyed must be recreated.

When starting with such a definition of money, it becomes apparent that when investments go sour, so does value.