I was wondering that, too. I wasn't sure what LIBERterryAN was even trying to say.
Gentlemen,
You just don't seem to get it.
(1) Not a single one of you, by my count, has shown me where the money comes from to pay interest.
Inquiring minds, gentlemen, are dying to know.
(2) You don't seem to realize that our banking system, metaphorically speaking, charges us big bucks to
breath the air. Why? Because they thought of it. Thats why.
Thus, if you want perfected markets, then you have to create promices-to-pay out of thin air, as debt,
but interest free. ...Only after we muscle the greedy-banker-trolls out of the way, can the invisible hand
make decisions in markets that are no longer distorted.
(3) Think about it: If you want to borrow money to buy a house, the bank DOES NOT lend you money
that they have. So now, you pay for 2 and 1/2 houses, and, in return, you get 1 house. And the
greedy-banker-troll gets 1 and 1/2 houses...why? Because they thought of it?
Outragious! Simply outragious! And you guys know exactly what I'm talking about.
Now it sounds like you didn't read the entire thread like you said you did.
fiat money sucks doesnt it.
but we dont need mathematics to perfect our economy.
we just need freedom.
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
Actually, gentlemen, I did read the entire thread. Just like I said I did.
And my original objection stands: When, exactly, is even 1 of you going to show me where the money comes
from to pay the interest?
Moreover, I think that you guys are making the same set of MISTAKEN assumptions, about Mathematically
Perfected Economy, that I, too, made, BECAUSE OF THE NAME.
Here is what I thought: When I heard the name---Mathematically Perfected Economy--- visions of a Hungarian
Central Planner entered into my head. ...But that's just me.
What I think has happenned here, is that you guys have made the same mistakes that I once made.
Well. Ignorance, once cured, returns for no good reason. So, here is what Mathematically Perfected Economy
REALLY IS:
(1) Principals for loans, are created out of thin air, as debt. ...Our current monetary regime does this anyway.
(2) But the loans are interest-free. ...Why would you pay somebody big bucks to do something that you could
do for yourself, for nothing?
(3) The ELIXUR: Loans are paid back, and the money is RETIRED from the circulation, in a time-based
manner which is the mirror-image of the depriciation of the product. Why? So there can be no inflation
or deflation. ...And, yeah, I know that stuff happens.
(4) Otherwise, there is NO government intervention in markets! No central planning. No regulations or
manipulations or market distortions----the invisible hand rule the day.
Here is a simple example: A car dealer decides to lend you money for a car which free markets have
decided is worth $20,000. And this car will last for 10 years. This car will depriciate in value in a linear,
straight-line fashion----that is, is will lose, on average, $2,000 in value per year.
(1) $20,000 are created out of thin air as debt.
(2) The car dealer recieves $20,000----a trade of equal measures of production in exchange for equal
measures of production. Why? Because the invisible hand says so. That's why.
(3) $2,000 per year are retired from the circulation as the loan is paid back untill, in ten years, ALL
$20,000 have been retired from the circulation.
The result: After year 1, there is $18,000 left in circulation, and the car is worth $18,000. After year 5,
there is $10,000 in circulation, and the car is worth $10,000. And so on and so on.
Get it? Under Mathematically Perfected Economy, (1) There is always enough money created out of
thin air to cause full employment----there is always full employment. (2) But, at the same time, there is
always, on average, an inflation rate of ZERO. (3) And there is no more business cycle.
Well, now you know. And you guys are making the same exact mistakes that I originally made.
LIBERterryAN:When, exactly, is even 1 of you going to show me where the money comesfrom to pay the interest?
I'll try. but tell me first, are you asking about where the money comes to pay interest under fiat money regime, or commodity money regime, or both regimes, or neither(regime)?
Where do you get money to pay for anything? You produce something that people are willing to trade money for! So to pay for a loan, you sell some service or good you produce, and then use that to pay your principle and interest! It's really not complicated at all.
You aren't suggesting that people should gain wealth without producing wealth, are you?
Maybe you should glance at the google spreadsheet that was linked earlier in the thread...
I'm saying both regimes.
Money as debt cranks drive me mad. Learn about money, please.
No, you gcopenhaver, are suggesting that people----bankers, that is----should gain wealth without producing
wealth. ...So, bite me.
And you, Caley McKibbon, know so little about money, that you don't even realize that I'm saying that
MONEY SHOULD BE DEBT. ...And that's the exact opposite of what "money as debt" claims.
And finally, I just love how your never-ending excuses for NOT showing me where the money comes
from, to pay the interest, have evolved: At first, it was THE DOG who ate your homework. But now,
Ludwig von Mises ate your homework----over ten thousand times! Heh heh heh.
LIBERterryAN: No, you gcopenhaver, are suggesting that people----bankers, that is----should gain wealth without producing wealth. ...So, bite me. And you, Caley McKibbon, know so little about money, that you don't even realize that I'm saying that MONEY SHOULD BE DEBT. ...And that's the exact opposite of what "money as debt" claims. And finally, I just love how your never-ending excuses for NOT showing me where the money comes from, to pay the interest, have evolved: At first, it was THE DOG who ate your homework. But now, Ludwig von Mises ate your homework----over ten thousand times! Heh heh heh.
The price of oranges increased by 30%, but where's the money going to come from!? The orange producers aren't producing anymore oranges, so why are they getting "additional wealth?!" An increase in the price of oranges must mean an inevitable economic collapse!
Exactly what, Esuric, does an increase in the price of oranges have to do with the true fact that there is never
enough money in circulation to pay interest?
True fact: there will never come a moment when ANY of you shows me where the money to pay the interest
comes from.
No? Well, I'm still waiting gentlemen. Purhapse, instead of constantly CHANGING THE SUBJECT, one
of you enlightened ones will show me where the money to pay the interest comes from?
I suspect we disagree on the definition of wealth.
Wealth is subjective. A person that likes bushes may view a bush growing near my house as an increase in their wealth. Someone else that doesn't like bushes may view a bush growing near their house as a decrease in their wealth (now they have to take time/energy/money out of their life to remove a bush they didn't want).
Someone allowing me to pay a fee to use their money is an increase in my wealth. A service that I wanted was provided for me, allowing me to purchase other items sooner than I would have been able to otherwise. If I view myself as being better off having paid interest to get a loan to buy something sooner, then my wealth has increased. If I view myself as being worse off for having paid interest to get a loan, then my wealth has decreased. It doesn't even matter if I gained monetarily...wealth is not all about money! Money and wealth are not the same thing. If I became miserable after gaining lots of money, I'm not necessarily wealthier. I may wish that I had chosen to be happy rather than acquire the money...I may consider that as being wealthy. Or I may not...it's subjective!
I was never forced to borrow money at interest (I'm disregarding any government debt that was borrowed on my behalf without my permission). When I've done so, it was because I agreed to, because I would benefit from it, not because someone pointed a gun to my head and said that I have to agree to a loan w/ interest. If I value the use of someone's money enough to pay them back even more than I borrowed, then what's the problem? If there's a mutual agreement, then what's the problem? Would I like a lower price? Certainly! That's why I shop around for a better price (interest rate == price). That's what competition is good for...businesses get more customers when they lower prices and increase value of their goods/services. The real problem with our banking system has nothing to do with it using fiat currency. The real problem is that it's a government created and protected banking cartel. There's relatively little genuine competition in that market. If there were, we more than likely would be using a harder money, and interest rates would be at the market rate, and the booms and busts would be greatly reduced.
And I think the spreadsheet shows quite well how a loan can be fully repaid with interest, despite the interest never being created (money supply remains constant in the example). The numbers can be changed however you want, or you could even play around with creating the money for the loan out of thin air if you wanted, and it would still work out fine. When playing with the numbers, keep in mind that in real life, or at least in a free market economy, both the lender and borrower tend to only agree on the loan when both are confident that the borrower will be able to make the payments. Any instances where the loan is defaulted are to be understood as a misplaced trust in the borrowers ability or willingness to repay the loan in it's entirety with interest.
LIBERterryAN: Exactly what, Esuric, does an increase in the price of oranges have to do with the true fact that there is never enough money in circulation to pay interest? True fact: there will never come a moment when ANY of you shows me where the money to pay the interest comes from. No? Well, I'm still waiting gentlemen. Purhapse, instead of constantly CHANGING THE SUBJECT, one of you enlightened ones will show me where the money to pay the interest comes from?
So, according to you, there 'isn't enough money' in the economy to pay interest, but how then could there be enough money in the economy to pay higher prices of food, say oranges? Where's the money going to come from to pay these higher prices? If rent increases, what then? Where will the money come from to pay additional rent?
The absurdity of your question is quite unique. I have never met someone with such a cloudy understanding of economics in my entire life.
LIBERterryAN: True fact: there will never come a moment when ANY of you shows me where the money to pay the interest comes from.
You have been shown. Either you haven't seen it, don't want to see it, aren't willing to acknowledge you've seen it, or just don't understand it.
Any money that the borrower gets from elsewhere in the economy is used for paying the interest. The borrower obviously must be producing some sort of wealth that others are willing to buy (such as working for a company, or writing software, or growing produce, etc), or he would have not been able to get the loan in the first place. He gets the money from those sales, and then can use that money to pay the loan with interest. He would not have been given the loan if he could not pay it back with interest. And obviously the lender has their own expenses, other investments, and the owners profits that puts that money right back in the economy, which can then make it's traded to the borrower again, allowing the borrower to make more payments on his loan w/ interest.
Let me say if I get what you guys are saying:
(1) If we create $100, out of thin air, as debt, with (say) 10% interest...then we've created $100 of temporary
money. And as we pay back the bank, then the $100 will be retired from the circulation. So, if all money is
created this way...then where does the $10 come from to pay the interest? Purhapse the Hebrew god----
Genesis, creates it out of nothing?
(2) If we lend out $100, under the constraints of the Gold Standard, at (say) 10% interest...then we owe
$110 dollars. And yet, only $100 gold dollars exists in circulation to account for this. Perhapse, again,
the Hebrew god----Genesis, creates it out of nothing?
You guys are just not serious. You're so wrapped in your ideology...that you have no common sense.
And my original objection stands: you still haven't showed me how you can make out loans, at interest,
and, at the same time, have enough money in circulation to pay the loans back.
You seem to be arguing in a vacuum. Ok you lend out 100 dollars, but where does that 100 dollars go after the borrow gets this loan?
'It is difficult to imagine any normal person wishing to meet Marx for a third time.' - Alexander Gray, The Socialist Tradition
LIBERterryAN:(2) If we lend out $100, under the constraints of the Gold Standard, at (say) 10% interest...then we owe$110 dollars. And yet, only $100 gold dollars exists in circulation to account for this. Perhapse, again,the Hebrew god----Genesis, creates it out of nothing?
money circulates. i dont have to *invent* 10more gold pieces in order to pay you back anymore than i have to invent 100$ gold dollars that you originally gave me which i spent on production. I speculated that my entrepenurial process will make profits. if i am right, money comes to me in exchange for the goods i make. be it 5$, precisely the 110$ dollars i owe you, or 1000$ . all i have to do to get money to give to you is to earn it by exchange with people that have the money,.
i can suceed or fail. entrepenurialism is risky business. there is profit there is loss. but its certainly a feasable prospect. and it is certainly sustainable indefinitely unless other bizarre set ups are being imagined (as opposed to a free market commodity-standard economy)...
LIBERterryAN: Let me say if I get what you guys are saying: (1) If we create $100, out of thin air, as debt, with (say) 10% interest...then we've created $100 of temporary money. And as we pay back the bank, then the $100 will be retired from the circulation. So, if all money is created this way...then where does the $10 come from to pay the interest? Purhapse the Hebrew god---- Genesis, creates it out of nothing? (2) If we lend out $100, under the constraints of the Gold Standard, at (say) 10% interest...then we owe $110 dollars. And yet, only $100 gold dollars exists in circulation to account for this. Perhapse, again, the Hebrew god----Genesis, creates it out of nothing? You guys are just not serious. You're so wrapped in your ideology...that you have no common sense. And my original objection stands: you still haven't showed me how you can make out loans, at interest, and, at the same time, have enough money in circulation to pay the loans back.
If the price of oranges goes up by 10%, and I still want to keep my level of orange consumption the same, then I must eat less apples, or less grapes (provided that my income remains the same). Likewise, If I wish to borrow $100 today, at 10% interest, I need to spend a little bit less on current consumption in order to pay off that debt in the future (namely when the debt is due). I'm giving $10 to the bank because they gave me money I wanted, but did not have. I choose to do this because I valued that $100 now more than the $110 due in 10 months, or whatever.
So just like oranges scenario, where I had to sacrifice consumption of other goods, I have to sacrifice consumption to pay off the interest. No new money needs to be created, just a reduction in consumption will suffice.
I respectfully disagree with your conclusion.
For example, If we have $100 gold dollars in circulation, and I borrow all 100 of them, at ANY rate of
interest...then there is not enough money in circulation to pay the debt.
What other possibility is possible.
Moreover, if we create $100 out of thin air, as debt, at (say) 10% interest, then there is only $100 in
circulation...but debts are $110.
How, then, does the debt get paid?
And finally, total outstanding debt, right now, is around $60 Trillion dollars. Why?
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