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It took me years to sort through needless&verbose economic mambo jumbo (explaining little or nothing conceptually to boot) to come up with a condensed essence (as I see it) of credit based capitalist economies, monetary systems & banking. Here is a very simplistic "no population/economy growth" sketch of "how monetary system works".
--------------------------------------------
Let's imagine a closed society consisting of you (the banker), state (the enforcer) and me (a generic wage slave). You (the banker) are granted exclusive rights by the hidden powers of Universe to create new money for our mini economy, an enforcer (state) makes sure that me (a generic wage slave) have to work to get the money in order to keep myself alive & fed ("how to" is not important in this sketch).
Imagine you (the banker) "create" $100 and loan $100 to me under a "small" stipulation - me paying you $105 back, if payments can't be done I promise the banker to give up agreed upon fruits of my labor and/or property. Where would I get extra $5 if I have no authority (under penalty of death) to create new money? Yup, you (a banker) would loan me another freshly minted $100 bill at 5% interest, I will pay you $105 of the old debt and I would owe you another $105 (while having only $95 on me), as we can see, a snow ball of debt is getting bigger and bigger with every "loan cycle". But simple paper/money debt is of no value to anyone (including bankers). Paper money debt got to be exchangeable for the real goods & services. In order to "encourage" me to be "productive" (a.k.a. to feed a banker&enforcer) I have to be forced to work for money, again, details of "How to" are unimportant here, we all know it can be done
What is the point of the debt pyramid if it never can be repaid? It's just common sense, the point of the credit driven economies is not for the bankers to accomplish impossible (i.e. to get all their money+interest back), the point of it all ... is to keep you working and producing on the behalf of the ones in charge of money creation and enforcement.
In absence of revolution, world war, pandemic, etc. debt pile can only mushroom to infinity and beyond, debtless capitalist economy is an oxymoron, it can't be. It takes more and more of new debt to pay off old debts and there is no way around that. Economy (i.e. debt) either grows exponentially or economy (and debt obligations) collapses into mayhem, there is no middle ground. BTW, bankers have a small trick in their sleeve, out of sudden they can freeze or slow down new money/debt creation to collect real physical assets like land, homes, plants, metals etc. debtors use as a collateral.
In the light of Economics 101 I come up with, debt ceiling squabble can be interpreted as a strong push (by some unknown forces) to shrink new money/debt creation so that certain group of "debt holders" could exchange debt obligations for some tangible physical assets & titles. On the other hand, the rest of elected folks (lead by Marx incarnate - Obama) believe that the party is not over yet and debt can be snowballed for little bit longer. Whatever course of action you prefer, the big arse correction is near. I have a hunch that people that matters are afraid that further debt snowballing may inadvertently expose the true nature of the monetary system and the people behind the debt ball. Money it's not only debt, it's also "faith" and you cannot keep that faith alive without periodic man made disasters.
What is the point of the debt pyramid if it never can be repaid? It's just common sense, the point of the credit driven economies is not for the bankers to accomplish impossible (i.e. to get all their money+interest back), the point of it all ... is to keep you working and producing on the behalf of the ones in charge of money creation and enforcement.
Yup, you are spot on. The reason this occurs is because ALL money that is put into circulation is done so AT INTEREST. So if you borrow 1$ at 5% interest/annum. After one year you will owe 1$ and 5 cents. If only 1 dollar exists in the economy then how can you pay back the 5 cents? You can't. Thats the problem, you can never be debt free.
Now the bigger problem is the fact that its the government that is borrowing all this money. So even if you are debt free then you are still liable to help pay the interest on the debt through taxes. So either way, you are screwed.
Quote:
If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them (around the banks),
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered.
-Thomas jefferson
Jefferson is referring to the process you are describing (debt based money). When jefferson says first by inflation he is talking about the process of banks lending more and more money (print it up). When he says then by deflation he is referring to when the banks stop printing money and now people are forced to repay their loans with money that is getting harder and harder to come by (deflation). The end result is foreclosure, repossession etc. of real property. The process is repeated when the banks start lending money again. This is what occurred during the great depression.
Thanks This is actually an extremely important topic. Yet there is ZERO talk about this in Washington, other than from some, "conspiracy nutjob" politician like rand paul or ron paul.
Also put these thoughts at the current debt debate. Look how desperate we are to raise the debt ceiling. Its going to cause a depression they say. If keeping a balanced budget will cause a depression then damn, we sure have a screwed up system! just remember, the more money we borrow, the more interest we have to pay! The chains clamp down harder and harder.
Sounds like a vile concept, no wonder I want to move to Canada.
Hate to tell ya but Canada is running on the exact same system. Any country that has a moderately successful socialist system will soon find it getting collapsed in by the banksters. Gotta make those interest payments! The only socialist countries that will survive are those that have massive exports or tons of natural resources to export. But even those countries won't be spared, eventually the trade balances change or the resources get depleted and its game over.
It took me years to sort through needless&verbose economic mambo jumbo (explaining little or nothing conceptually to boot) to come up with a condensed essence (as I see it) of credit based capitalist economies, monetary systems & banking. Here is a very simplistic "no population/economy growth" sketch of "how monetary system works".
--------------------------------------------
Let's imagine a closed society consisting of you (the banker), state (the enforcer) and me (a generic wage slave). You (the banker) are granted exclusive rights by the hidden powers of Universe to create new money for our mini economy, an enforcer (state) makes sure that me (a generic wage slave) have to work to get the money in order to keep myself alive & fed ("how to" is not important in this sketch).
Imagine you (the banker) "create" $100 and loan $100 to me under a "small" stipulation - me paying you $105 back, if payments can't be done I promise the banker to give up agreed upon fruits of my labor and/or property. Where would I get extra $5 if I have no authority (under penalty of death) to create new money? Yup, you (a banker) would loan me another freshly minted $100 bill at 5% interest, I will pay you $105 of the old debt and I would owe you another $105 (while having only $95 on me), as we can see, a snow ball of debt is getting bigger and bigger with every "loan cycle". But simple paper/money debt is of no value to anyone (including bankers). Paper money debt got to be exchangeable for the real goods & services. In order to "encourage" me to be "productive" (a.k.a. to feed a banker&enforcer) I have to be forced to work for money, again, details of "How to" are unimportant here, we all know it can be done
What is the point of the debt pyramid if it never can be repaid? It's just common sense, the point of the credit driven economies is not for the bankers to accomplish impossible (i.e. to get all their money+interest back), the point of it all ... is to keep you working and producing on the behalf of the ones in charge of money creation and enforcement.
In absence of revolution, world war, pandemic, etc. debt pile can only mushroom to infinity and beyond, debtless capitalist economy is an oxymoron, it can't be. It takes more and more of new debt to pay off old debts and there is no way around that. Economy (i.e. debt) either grows exponentially or economy (and debt obligations) collapses into mayhem, there is no middle ground. BTW, bankers have a small trick in their sleeve, out of sudden they can freeze or slow down new money/debt creation to collect real physical assets like land, homes, plants, metals etc. debtors use as a collateral.
In the light of Economics 101 I come up with, debt ceiling squabble can be interpreted as a strong push (by some unknown forces) to shrink new money/debt creation so that certain group of "debt holders" could exchange debt obligations for some tangible physical assets & titles. On the other hand, the rest of elected folks (lead by Marx incarnate - Obama) believe that the party is not over yet and debt can be snowballed for little bit longer. Whatever course of action you prefer, the big arse correction is near. I have a hunch that people that matters are afraid that further debt snowballing may inadvertently expose the true nature of the monetary system and the people behind the debt ball. Money it's not only debt, it's also "faith" and you cannot keep that faith alive without periodic man made disasters.
Hi RememberMee,
I am semi-retired trying to explain this. There are few who understand what is really meant by a "credit economy". We have quite simply monetized debt. This creates the wealth-debt paradox where more debt means more money. The money supply expanded with the addition of sub prime. When sub prime lending stopped, it demonetized their debt and created conditions similar to the demonetization of silver in the 1870s. Then more people fell into sub prime status as the depressed economy took them down.
The power in the hands of bankers is more than any human should have. However bankers already control Washington and for that matter the world. This is a new era of financial feudalism.
Yup, you are spot on. The reason this occurs is because ALL money that is put into circulation is done so AT INTEREST. So if you borrow 1$ at 5% interest/annum. After one year you will owe 1$ and 5 cents. If only 1 dollar exists in the economy then how can you pay back the 5 cents? You can't. Thats the problem, you can never be debt free.
What I'm hearing is that you are a lazy slug and you want to use the resources of someone else but you do not want to compensate them for using their resources.
That would be like your friend borrowing your car 3 times a week and when you ask them for $1 to buy gasoline because you're short on cash, your friend tells you to get bent.
And you would be screaming bloody hell.
If I have $1, there's a lot I could do with it, including loaning it you, except you aren't the only person in the universe and there are many others who would like to borrow the $1 and put it to good use. So I guess the question is, what is worth to you to borrow $1?
You get the extra $5 from your slave wages. You could, of course, save up the full $100 from the fruits of your slavery, but that might not be feasible. Let's say you make $25 a year in wages but need to spend all but $10 of it to live. Maybe you don't want to save up for ten years to buy a house. You'd rather borrow the money and pay back $5 a year to the evil banker with nasty evil tricks up his sleeve and have the instant gratification today.
Since we don't live in anything resembling a closed economy the whole thing is really just an absurd artificial construction that has nothing to do with reality...
I like this quote. “The hollow words “deficits don’t matter” echo through my mind. They are spoken in the arrogant tone of supposedly educated people who continue to spread their debt backed manure. Of course they spread this manure knowing that it fertilizes their returns.”
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