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Mu: Question cannot be answered because "win" is not defined. Does winning require 

a) Dictating terms, in the style of Versailles?

b) As above, but also not burning to cinders the social technology that allowed you to fight such a war in the first place? (As happened to the OTL victors.)

c) As above, but also getting some kind of actual net benefit either in geopolitical-power terms or in goods for your citizens? (As very noticeably did not occur for the OTL "victors".)

d) A negotiated peace in which it's generally recognised that you had the upper hand and got most of the surplus? (Surplus relative to continuing the war, that is.) Same variants as above.

e) Any peace that avoids the total collapse of OTL Germany and resulting even-more-disastrous war?

f) Any peace in which the prewar decision makers emerge with their personal power and prestige enhanced, whatever happens in Germany at large?

g) Avoiding the conflict entirely? (Best option! Investing in productive assets will get you a lot more benefit than trying to win a massively negative-sum game!)

The Wiki link on Operation Bernhard does not very obviously support the assertions you make about the Germans flinching. Do you have a different source in mind?

Did you, by any chance, predict this result anywhere? Explanations after the result are a dime the dozen.

There's some sort of "out of sight, out of [their] minds" pun here.

That aside, isn't this the actual purpose of mental institutions? Like the attics of previous generations, they are where we stow people we prefer not to think about. And you have to admit they do that job very well indeed.

The free market can't be always pushing down the price of all goods (measured in other goods), that's a logical impossibility.

And yet that seems to be precisely what has happened.

However, supposing we hold tech progress and capital investment constant, then yes, we'll reach a steady state in which prices as a whole cannot fall further. But that still does not demonstrate that it is possible to maintain the sort of high-value-extraction transactions you outline for any great length of time. If the profit of bread is high then it will fall as people enter the market; this will, yes, slightly raise the profit of all other occupations, holding technology and capital steady. But the eventual equilibrium has all the profit rates being the same. Otherwise investment flows from the low-profit ones to the high-profit ones.

It seems like you have just reinvented the criticism "if you can extract almost all the value from each transaction (aka 'exploitation'), you will shortly be rich". Well, yes, but the point is that a market with competition generally prevents you from doing that. As someone pointed out, if you make 100 loaves then you have created 100 dollars of value; the question is how those 100 dollars are distributed. You construct an example where the baker is able to capture 99% of the value he created; good for him, but it relies on your construction of the price. Seeing the baker get rich, won't a bunch of other people decide that bread-making can't be that hard, make some loaves, and sell them for 98 cents? And so on until the price of bread is equal to the cost of production plus the smallest profit anyone is willing to live with, which in your example seems to be a penny.

It's disrespectful to people who don't have any food to eat, much less play with. Food is important, and this fact is easily forgotten.

Idea 2 seems very vague. Can you give an example of how I would use it?

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