Where has all the money in the world gone?

[TheNocturnalEgyptian]

Honest question.

Where is all the money? I hear nothing but bad news about financial crisis all over the world, and it seems that there is a shortage of cash - like it is some sort of natural resource.

People haven't stopped buying stuff. They still need food, clothing, medicine, shelter. Taxes are still collected. Fines are still levied.

So where is all the money? I mean, labor has been produced to make things and wages paid to the laborers. The things are purchased by other laborers, who were paid for producing goods or services, etc. It's a closed loop, right?

Can someone explain it like I'm five or something?




It's hard to explain this to a five-year-old, because there are some fairly abstract concepts involved, but here goes...

Originally posted by otherwiseyep:

All actual "money" is debt. All of it, including monetary gold, etc. (Don't argue with me yet, I'll get to that.)

Imagine a pretend world with no money, some kind of primitive villiage or something. Now let's invent paper money. You can't just print a bunch of paper that says people have to give you stuff, because nobody would honor it. But you could print IOUs. Let's walk through this...


Let's say you're an apple-farmer and I'm a hunter. You want some meat but haven't harvested your crops yet. You say to me, "hey, go hunt me some meat and I'll give you 1/10th of my apple harvest in the fall". Fair enough, I give you meat, you owe me apples. There's probably a lot of this kind of stuff going on, in addition to normal barter. In time, standard "prices" start to emerge: a deer haunch is worth a bushel of apples, or whatever.


Now, let's say a week later, I realize that my kid needs a new pair of shoes more than I need a bushel of apples. I come back to you and say, "Hey remember that bushel of apples you owe me? Could you write a marker, redeemable for one bushel of apples, that I can give to the shoemaker in trade for a pair of shoes?" You say okay, and we have invented a transferable note, something a lot like money.


In time, our little villiage starts to figure out that a note redeemable for a bushel of apples can be swapped for all kinds of things. The fisherman who doesn't even like apples will accept apple-certificates in trade for fish, because he knows he can trade them to boat-builder who loves apples. In time, you can even start to hire farm-workers without giving them anything except a note promising a cut of the future harvest.

Now, you are issuing debt: a promise to provide apples. The "money" is a transferable IOU-- your workers get a promise to provide value equal to a day of farm-work, or whatever, and it's transferrable, so they can use it to buy whatever they want. The worker gets fish from the fisherman, not in exchange for doing any work or giving him anything he can use, but in exchange for an IOU that the fisherman can redeem anywhere.

So far so good. But there are a couple of forks in the road here, on the way to a realistic monetary system, that we'll address separately:


What happens if your apple orchard is destroyed in a wildfire? Suddenly all the notes that everyone has been trading are basically wiped out. It didn't "go" anywhere, it's just gone, it doesn't exist. Real value was genuinely destroyed. There is no thermodynamic law of the conservation of monetary value-- just as you and I created it by creating transferable debt, it can also be genuinely destroyed. (We'll get back to this in a minute, it gets interesting).


The second issue is that, in all probability, the whole town is not just trading apple-certificates. I could also issue promises to catch deer, the fisherman could issue promises of fish, and so on. This could get pretty messy, especially if you got the notion to issue more apple-certificates than you can grow: you could buy all kinds of stuff with self-issued debt that you could never repay, and the town wouldn't find out until harvest-time comes. Once again, value has been "destroyed" people worked and made stuff and gave you stuff in exchange for something that doesn't exist, and will never exist. All that stuff they made is gone, you consumed it, and there is nothing to show for it.

The above two concerns are likely to become manifest in our village sooner or later, and probably sooner. This leads to the question of credit, which is, at its most basic, a measure of credibility. Every time you issue an apple-certificate, you are borrowing, with a promise to repay from future apple-harvests.

After the first couple of town scandals, people will start taking a closer look at the credibility of the issuer. Let's say the town potato-farmer comes up with a scheme where his potato-certificates are actually issued by some credible third-party, say the town priest or whatever, who starts every growing season with a book of numbered certificates equal to the typical crop-yield and no more, and keeps half of the certificate on file, issuing the other half. Now there is an audit trail and a very credible system that is likely to earn the potato-grower a lot of credit, compared to other farmers in town. That means that the potato-grower can probably issue more notes at a better exchange rate than some murkier system. Similarly, the town drunk probably won't get much value for his certificates promising a ship of gold.

Now we have something like a credit market emerging, and the potato-farmer is issuing something closer to what we might call a modern "bond"...

So some time goes by and people start catching onto this system of credit-worthiness, and farmers and fishermen and so on start to realize that they can get better value for their IOUs by demonstrating credibility. People with shakier reputations or dubious prospects may not be able to "issue money", or might only be able to do so at very high "interest". E.g., a new farmer with no track-record might have to promise me twice as many potatoes in exchange for a deer haunch, due to the risk that I might never see any potatoes at all.


This obviously gets very messy fast, as different apple- and potato-certificates have different values depending on whether they were issued by Bob or Jane, and everyone has to keep track of and evaluate whose future apples are worth what.


Some enterprising person, maybe the merchant who runs the trading-post, comes up with the idea to just issue one note for all the farms in town. He calls a meeting with all the farmers, and proposes to have the town priest keep a book of certificates and so on, and the farmers will get notes just like everyone else in exchange for the crops they contribute to the pool, and the merchant will keep a cut of the crops with which to hire some accountants and farm-surveyors to estimate the total crop yields across town and so on.


Everyone agrees (or at least, enough farmers agree to kind of force the other ones to get on-board if they want to participate meaningfully in the town economy), and we now have something like a central bank issuing something like fiat currency: that is, currency whose value is "decided" by some central authority, as opposed to the kind of straight-up exchange certificates that can be traded for an actual apple from the issuer, for example.


Now we have something that looks a lot like a modern monetary system. The town can set up audit committees or whatever, but the idea is that there is some central authority basically tasked with issuing money, and regulating the supply of that money according to the estimated size of ongoing and future economic activity (future crop yields).


If they issue too much money, we get inflation, where more apple-certificates are issued than apples grown, and each apple-note ends up being worth only three-quarters of an apple come harvest-time. If they issue too little currency, economic activity is needlessly restricted: the farmers are not able to hire enough workers to maximize crop yields and so on, the hunter starts hunting less because his deer meat is going bad since nobody has money to buy it, and so on.

At this point, you may be asking, "Why the hell go through all this complexity just to trade apples for deer and shoes? Isn't this more trouble than it's worth?"

The answer is because this is a vastly more efficient system than pure barter. I, as a hunter, no longer need to trade a physical deer haunch for a bushel of apples to carry over to the shoemaker in order to get shoes. You, as an apple-farmer, can hire workers before the crop is harvested, and therefore can grow more, and your workers can eat year-round instead of just getting a huge pile of apples at harvest-time to try and trade for for whatever they will need for the rest of the year.

So back to money...

The thing to remember is that all throughout, from the initial trade to this central-banking system, all of this money is debt. It is IOUs, except instead of being an IOU that says "Kancho_Ninja will give one bushel of apples to the bearer of this bond in October", it says "Anyone in town will give you anything worth one bushel of apples in trade."

The money is not an actual thing that you can eat or wear or build a house with, it's an IOU that is redeemable anywhere, for anything, from anyone. It is a promise to pay equivalent value at some time in the future, except the holder of the money can call on anybody at all to fulfill that promise-- they don't have to go back to the original promiser.

This is where it starts getting interesting, and where we can start to answer your question...

(for the sake of simplicity, let's stop calling these notes "apple certificates", and pretend that the village has decided to call them "Loddars").


So now you're still growing apples, but instead of trading them for deer-haunches and shoes, you trade them for Loddars. So far, so good.


Once again, you want some meat, except harvest time hasn't come yet so you don't have any Loddars to buy meat with. You call me up (cellphones have been invented in this newly-efficient economy), "Hey otherwiseyep, any chance you could kill me a deer and I'll give you ten Loddars for it at harvest-time?"


I say, "Jeez, I'd love to, but I really need all the cash I can get for every deer right now: my kid is out-growing shoes like crazy. Tell you what: if you can write me a promise to pay twelve Loddars in October, I can give that to the shoe-maker." You groan about the "interest rate" but agree.

Did a lightbulb just go off? You and I have once again created Money. Twelve loddars now exist in the town economy that have not been printed by the central bank. Counting all the money trading hands in the village, there are now (a) all the loddars that have ever been printed, plus (b) twelve more that you have promised to produce.

This is important to understand: I just spent money on shoes, which you spent on deer meat, that has never been printed. It's obviously not any of the banknotes that have already been issued, but it's definitely real money, because I traded it for new shoes, and you traded it for a dead deer.


Once you and I and others start to catch on that this is possible, that we can spend money that we don't have and that hasn't even been printed yet, it is entirely possible for a situation to arise where the total amount of money changing hand in the village vastly exceeds the number of loddars that have actually been printed. And this can happen without fraud or inflation or anything like that, and can be perfectly legitimate.


Now, what happens if another wildfire hits your orchard? Those twelve loddars are destroyed, they are gone, the shoe-maker is twelve loddars poorer, without spending it and without anyone else getting twelve loddars richer.

The money that bought your deer and my shoes has simply vanished from the economy, as though it never existed, despite the fact that it bought stuff with genuine economic utility and value.

[TheNocturnalEgyptian]

Sidebar on gold and gold-backed currency and stuff like that:

Because I said I would get to it...

The above pretend history of the pretend village is not how modern money actually came to be. In reality, things are much less sequential and happen much more contemporaneously without the "eureka!" moments. The above was a parable to illustrate how money works to a 5-year-old, not an actual history of how money emerged.

Until fairly recent times, paper money was not really very useful or practical for most purposes, especially if you wanted to spend money in a different village than where it was printed.

If we go back in time a period before ATMs, wire-transfers, widespread literacy, etc, then a piece of paper written in Timbuktu is not likely to get you very far in Kathmandu. You could take your apples and deer-haunches and shoes around with you to trade, but the earliest naturally-emerging currencies tend to be hard things that were rare and easily-identifiable (jewels, colored shells, etc), and they frequently coincided with the personal decorations of the rich, in a self-reinforcing feedback loop (people with a surplus of time and food could decorate themselves with pretty things, which became valuable as status symbols, which made them more valuable as decorations, which made them more valuable as barter objects, which made them more prestigious shows of wealth, etc).

Gold emerged as a sort of inevitable global currency, before people even thought of it as currency. It is rare, portable, easy to identify, can easily be made into jewelry, and can be easily quantified (unlike, say, jewels or seashells, which are harder to treat as a "substance"). Once word got around that rich people like it, it became easy to barter with anyone, anywhere, for anything.

In the early stages, it was not really the same thing as "money", it was just an easy thing to barter. But it had money-like characteristics:


If someone walked into your apple-orchard offering to trade a yellow rock for apples, you might look at them a little funny. What use does an apple-grower have for a yellow rock?


But if you know that rich people in town covet this soft yellow metal as something they can make jewelry out of, then you might be happy to trade apples for it.


Once everyone knows that rich people will trade for this stuff, it becomes something like actual currency: neither the hunter, the shoemaker, nor the fisherman in town has much use for it, but because they know they can redeem it for the stuff they do want and need, it becomes a sort of transferable IOU that can be redeemed anywhere, i.e., money.

The early history of paper money did not evolve the way I described in the earlier posts (although it could have, and would have got to the same place). Instead, the early history of paper money was certificates issued by storage-vaults of precious metals (i.e., early "banks"). Instead of carrying around yellow and silver rocks, you could deposit them somewhere and get a piece of paper entitling the holder to withdraw a certain quantity of gold or silver or whatever.

Pre-1934 dollars, like virtually all paper currency until fairly recently, could be redeemed for physical gold or silver at a Federal Reserve Bank, and dollars were only printed if the treasury had enough physical gold and silver to "pay off" the bearer with precious metals.

For a whole lot of reasons that are topics for another discussion, decisions were made that eventually led to the abandonment of the "gold standard" and now the dollar, like most modern currencies, is pure fiat paper: it's only "worth" whatever everyone agrees it is worth, and can only be "redeemed" by trading it to someone else for whatever they will give you for it. There are long, loud, and ongoing feuds over whether that was a good idea, and I'm not going to get into that here.
[haha I wish you would get into it.]

[TheNocturnalEgyptian]

"Gold" is not debt, "money" is debt (whatever it is made of).

In the example above, everything could have been exactly the same, except using certificates written on sharks instead of on paper.

Now, sharks have value, paper has value, and gold has value. When you print money, the stuff you make it out of has some utility separate from its use as currency. But when you are using it as currency (regardless of what it is made from), it is a marker for debt.

You go to work for an hour, your boss gives you a marker that you can trade for a cheeseburger or some gasoline or a ferret or cantaloupes, or whatever you want. That marker is an IOU for the work you did. You give it to the cantaloupe store, and it becomes an IOU for the value of one cantaloupe. They give it to the store employees or the cantaloupe-grower or whatever, and so on.

It doesn't matter what that marker is made out of, its function is the same. If it were gold, you could melt it down and make a ring out of it. If it's paper, you could use it as a bookmark or a shopping list or to blow your nose, if it's a shark you scare people with it in the pool.

N.B., this is totally separate from the question of whether we should be using gold as a currency, which has to do with the fact that the gold supply is a lot more stable than the paper supply, and whether being able to easily print more money on demand is a good thing or a bad thing.

[vacuum]

So to sum this up:


Money is an IOU which is redeemable for something, which is credit
Such money (credit) can disappear when the thing it represents can no longer feasibly provide the material goods which were originally promised.
Charging interest provides near-term consumption at the expense of long-term obligations

[Glass]

Money is interesting. Societal Calamity always occurs when something you have mentioned, "Credibility" gets a pummeling. Like the question of Gold Money, I'll elaborate in a moment.

I've been watching old episodes of M.A.S.H. I noticed a lot of things. 2 in particular stand out. 1 of those things was Money. In the Army you used to get Army Scrip. Army Money. You had to have this scrip to buy items on base. Local villages would accept Army Scrip, even if they weren't supposed to, because it was tradable with the GI Joes and with Hung Long Fo at the local bar.

In one episode the Army had decreed a new Scrip. I think it was Red Scrip to replace Blue Scrip or vice versa. There were counterfieters. Anyway Charlie decided he could offer $0.10 on the $1.00 to the villagers and then exchange those at 100cents on the $1.00 before the cut off.

Way way back in time, Americans worked on railway construction. They worked in big coal mines. These workers were paid Company Scrip. This Scrip could only be spent at Company Stores at Company Prices. It was at these places that we saw some of the worst violence against the average Joe in American History. Same thing happened in the UK, Australia, India, South Africa. People rioted because the Companies were stealing from the workers by manipulating the weights and measures of everything including the purchasing power of the comapny scrip.

We've seen this before. Women being "shipped" to new countries and then being forced to raise $30,000.00 in 4 weeks to pay the person who smuggled them to this new country. Then you have the slave trader, pimp setting the value of the prostitues labour at well below market rate, so they get more work, more money than that prostitute would be paying elsewhere.

The biggest problem with all of this is a thing called Fair Weights and Measures. The Government is responsible to ensure Fair Weights and Measures for everything. A short list might include:
The purchasing power of the currency
The amount of food in a can of food.
The amount of gasoline in a gallon or litre.
The scale used by a butcher or grocer.
The distance in a Mile or Kilometre

This goes back Credibility. This is why people get tangled up in the Government and Banking and Licencing. The reason is because if it is Government sanctioned, it is seen to be credible. The measure is going to be correct if it is Government sanctioned. The person with the licence can drive because it's Government sanctioned, even if not necessary.

This can ONLY be the case while the Government has credibility. We know from history that corporations, Government or otherwise will lie and cheat on everything they can, including Fair Weights and Measures. They can do this for many many years because they can fool enough of the people all of the time. In some cases, eventually the realisation occurs to the mass of Joes that they are being gipped and the Government starts to lose credibility.

The practise of issuing bills of exchange goes way back and usually occured mano a mano, however that changed as credibility was sought by each party in relation to the other. The Government lends the credibility and confidence to the parties to an exchange of bills. People always created their own debt but to give it credibility (and proifit) they shifted that task to Banks. Now people think banks lend money when they actually don't.

We know that Gold Money is succeptible to the scruplles of those who would cheat you by manipulating the fair weights and measures. We see the Government do that day in day out. Even the measure of criminality is abused in this way.

[palani]

http://www.nacrs.org/main.php?id=free_materials

Suggest Coin's Financial School e-book download at the above site.

[Bigjon]

http://www.nacrs.org/main.php?id=free_materials

Suggest Coin's Financial School e-book download at the above site.

Nice little book.

http://www.nacrs.org/docs/WilliamHarveyNACRS.pdf

[Carl]

http://www.nacrs.org/main.php?id=free_materials

Suggest Coin's Financial School e-book download at the above site.

Thanks palani, good little book.

[Santa]

Screech! Wait a sec.

Going back to the OP's story intro. Why is it presumed that the apple farmer borrowed against his future harvest?
If the farmer wanted something, why did he not just wait till the apples or grain or whatever were busheled up and then taken
into town to be converted into scrip or money that could be traded for other stuff.

In that case, money would not be credit/debt based at all, but represent the actual value of a quantity of apples,
although I'm not sure how that value would be determined.

[vacuum]

Screech! Wait a sec.

Going back to the OP's story intro. Why is it presumed that the apple farmer borrowed against his future harvest?
If the farmer wanted something, why did he not just wait till the apples or grain or whatever were busheled up and then taken
into town to be converted into scrip or money that could be traded for other stuff.

In that case, money would not be credit/debt based at all, but represent the actual value of a quantity of apples,
although I'm not sure how that value would be determined.

Two things. First of all, apples are only available at harvest. In that system he could only buy things once a year, because his apples have a limited shelf life.

Second, even if he did have the apples on hand, it's still credit. If you take the note to him, how do you know the apples will still be there? How do you know they will be as advertised? How do you know he will honor the note even if he's got the apples?

[Awoke]

Where is all the money? The short answer is, in the computer memory chips. It's digital for the most part.

This quote from the linked book is interesting. It could almost apply today.



Hard times are with us ;
the country is distracted ;
very few things are marketable at a price above the costof production ;
tens of thousands are out of employment ;
the jails, penitentiaries, workhouses and insane asylums are full ;
the gold reserve at Washington is sinking ;
the government is running at a loss with a deficit in everydepartment ;
a huge debt hangs like an appalling cloud over the country ;
taxes have assumed the importance of a mortgage, and 50 per cent of the public revenues are likely to go delinquent ;
hungered and half-starved men are banding into armies and marching toward Washington ;
the cry of distress is heard on every hand ;
business is paralyzed ; commerce is at a standstill ;
riots and strikes prevail throughout the land ;
schemes to remedy our ills when put into execution are smashed like box-cars in a railroad wreck, and Wall street looks in vain for an excuse to account for the failure of prosperityto return since the repeal of the silver purchase act.

[palani]

As to where the money has gone ... creation of money is based upon borrowing. You create the money for your $200,000 home by signing a document stating you are planning on repaying the loan. What you don't create is the interest required to service the loan. The money for the interest must come from some outside source and everyone with loans compete for an ever dwindling supply of money guarantees that the surplus money will vanish.

[Bigjon]

As to where the money has gone ... creation of money is based upon borrowing. You create the money for your $200,000 home by signing a document stating you are planning on repaying the loan. What you don't create is the interest required to service the loan. The money for the interest must come from some outside source and everyone with loans compete for an ever dwindling supply of money guarantees that the surplus money will vanish.

The money to pay the interest is INCLUDED in the original loan amount, because the bankster spends that money back into the economy.

The interest money is recycled more than once.

[palani]

The money to pay the interest is INCLUDED in the original loan amount, because the bankster spends that money back into the economy.

The interest money is recycled more than once.

That is not the way the 1099OID people have the system figured out. Bankers may handle money but they don't create it and (other than salaries and bricks and mortar) they really don't spend a lot.

If what you are suggesting is true then there is no defect by design and everything is proceeding as intended.

[Bigjon]

That is not the way the 1099OID people have the system figured out. Bankers may handle money but they don't create it and (other than salaries and bricks and mortar) they really don't spend a lot.

If what you are suggesting is true then there is no defect by design and everything is proceeding as intended.

There is no law requiting bankers to spend the interest money they collect. They do withhold spending to create deflation when that is what they want.

What I'm saying is the system works perfectly well, but there are people who can't understand that money is a thing and spending is an action done using money.

You may be confusing that part of every payment goes towards paying a portion of the principal and in the case of expanded checkbook money that portion is erased off of the bankers ledger (goes back to money heaven). However the interest portion stays in the system because the banker spends it.

As far as your note that bankers don't spend much, you must not have looked at the figures for their donations to O'Bomney.

[Santa]

Two things. First of all, apples are only available at harvest. In that system he could only buy things once a year, because his apples have a limited shelf life.

Second, even if he did have the apples on hand, it's still credit. If you take the note to him, how do you know the apples will still be there? How do you know they will be as advertised? How do you know he will honor the note even if he's got the apples?

Ok, good points, but in the first instance, apples can be stored easily. Hell, even tomato's can be stored. They do have a limited shelf life though, like all perishables, so that would require that the money being used to represent the perishables also have a limited time/value attached. Each money unit would have to be spent within a given period of time.

Second, the apple farmer would take his produce, fresh, cold stored or dried to the store and exchange it for money, just as the hunter would take his venison to the store to be converted to money as well. No debt. No credit. Just fair exchange.

Anyway, I'm just imagining how money "might" be used without it inevitably becoming a debt instrument.

It seems to me that money disappears as a consequence of a peoples inability to produce goods to exchange with one another.

That apple orchard that my Grandfather planted 100 years ago got turned into a Highway and a County Landfill.
My father got a deduction on his property taxes and I got this T-shirt that says, "made in Taiwan."

[vacuum]

Second, the apple farmer would take his produce, fresh, cold stored or dried to the store and exchange it for money, just as the hunter would take his venison to the store to be converted to money as well. No debt. No credit. Just fair exchange.
In this case the money is based off of the credit of the government instead of the individuals. "If you don't hold it, you don't own it"....if you trade it for paper then you are entrusting someone else to hold it and the note is trusted to be redeemable for the object.

[Santa]

In this case the money is based off of the credit of the government instead of the individuals. "If you don't hold it, you don't own it"....if you trade it for paper then you are entrusting someone else to hold it and the note is trusted to be redeemable for the object.

Maybe, though I'm not sure that the words credit and credible can be used interchangeably to mean the same thing like that.

But anyway, gold as opposed to paper has a perceived value as well, doesn't it? It's value being determined by the elite aristocracy or government, as is always the case.

Unless, the store is free to compete with the official coin of the realm.

Ah, WTF... I'm yammering out my ass. Sorry. Over my head. :)

[Hatha Sunahara]

There is no law requiting bankers to spend the interest money they collect. They do withhold spending to create deflation when that is what they want.

What I'm saying is the system works perfectly well, but there are people who can't understand that money is a thing and spending is an action done using money.

You may be confusing that every part of a payment goes towards paying a portion of the principal and in the case of expanded checkbook money that portion is erased off of the bankers ledger (goes back to money heaven). However the interest portion stays in the system because the banker spends it.

As far as your note that bankers don't spend much, you must not have looked at the figures for their donations to O'Bomney.

BigJohn--you might want to check out this simple little story:

http://whatreallyhappened.com/WRHARTICLES/11thmarble.php

What Palani is referring to is that the bankers never create the money that is paid to them as interest. They only 'create' the principal. The amount of money in circulation is the unrepaid principal. The money owed as debt is the unrepaid principal plus the interest, Total debt therefore exceeds the money supply by the amount of interest owed. That excess is 'unpayable debt'. It cannot shrink. It can only grow. The system therefore prescribes and predicts its own doom. The only question is when that doom will be apparent to everyone. Get a leg up and be one of the early comprehenders of this 'slippery' bit of logic. The bankers know this, and they are trying to put the collapse of the whole system off for just a little while longer with 'bailouts'.


Hatha

[Bigjon]

BigJohn--you might want to check out this simple little story

http://whatreallyhappened.com/WRHARTICLES/11thmarble.php

What Palani is referring to is that the bankers never create the money that is paid to them as interest. They only 'create' the principal. The amount of money in circulation is the unrepaid principal. The money owed as debt is the unrepaid principal plus the interest, Total debt therefore exceeds the money supply by the amount of interest owed. That excess is 'unpayable debt'. It cannot shrink. It can only grow. The system therefore prescribes and predicts its own doom. The only question is when that doom will be apparent to everyone. Get a leg up and be one of the early comprehenders of this 'slippery' bit of logic. The bankers know this, and they are trying to put the collapse of the whole system off for just a little while longer.


Hatha

WRONG, WRONG, WRONG ARRRGGGHHH!!!

You just don't get it, do you.

There is no need to create any money besides the money for the loan.

When the banker spends the interest where does it go?


People can and do use false explanations that don't model how the repayment process works in our banking system.

For instance it is impossible to pay off a 100 dollar loan at 10 percent interest with only one payment and only 100 dollars in the system

but it is quite easy to structure the loan repayment into 11 payments of 10 dollars each with the banker spending his 1 dollar interest after each payment.

[Hatha Sunahara]

OK, if the money they create is just the principal, and what people owe them is the principal plus the interest, where does the interest come from? Who creates the interest? Or do people just borrow more principal to pay off the interest?


Hatha

[Bigjon]

OK, if the money they create is just the principal, and what people owe them is the principal plus the interest, where does the interest come from? Who creates the interest? Or do people just borrow more principal to pay off the itnerest?


Hatha

First the loan repayment schedule has to be right, to accommodate a number of small payments.

It comes from the bankers spending of the interest collected. There is no need to borrow any additional money.

The money is recycled, spent many times. Banker spends interest to buy your congress critter, critter takes money and buys a prostitute, Prostitute buys drugs from her dealer, dealer buys dinner at fancy restaurant, xxx on and on it goes same money 100 dollars but spent 6 times +.

[Hatha Sunahara]

If you went to the bank and borrowed $100 at an interest rate of 5% per day, and you planned to pay it back tomrrrow, and this was all the money in circulation in the entire world, where would you get the extra $5 to pay as interest tomorrow? Would you give them $5 worth of whatever you produce? What if they wanted money?


Hatha

[Bigjon]

If you went to the bank and borrowed $100 at an interest rate of 5% per day, and you planned to pay it back tomrrrow, and this was all the money in circulation in the entire world, where would you get the extra $5 to pay as interest tomorrow? Would you give them $5 worth of whatever you produce? What if they wanted money?


Hatha

Like I said you can dream up all sorts of examples that won't work, BUT they don't model the system you are trying to describe.

Or maybe they do model something called misinfo.

You are confusing spending (payments are spending) with money.

You are saying a noun has to equal a verb or in other words you are claiming the amount of money has to equal the amount of spending.

[Serpo]

In answer too your question.....its OK Im looking after it............;D

[Hatha Sunahara]

Bigjon-- You need to revisit your assumption that the interest is INCLUDED in the amount borrowed. The amount borrowed is the principal. In order for you to pay your interest obligation, somebody else has to borrow money, and get it into circulation so that you can work for it and earn some of it to pay your interest obligation. As long as someone can borrow more money, there may be enough money for people to pay interest on their loans.

We are talking about debt-based money. All of it is borrowed into existence, but more of it is owed (debt) because of interest, than actually exists to pay it back. The way this system works, that amount owed beyond the money that is in circulation can never be paid back. Because of this, the whole system is a fraud--a giant ponzi scheme. This is what is behind the Global Financial Crisis. The tipping point has been reached. What happens next is that everyone will wake up (including you) and see this, and the confidence in the debt based fiat money will evaporate. This is why there is so much planning for Fema camps, and militarized police, and totalitarian government. They are planning for the big 'awakening'. People won't be happy when they finally understand how they have been defrauded not only by the money scheme, but by the 'Laws' that support it.

You might find it hard to believe, but the bankers already own everything. That happened in 1933 when the US declared bankruptcy. Read about that one here:

http://barefootsworld.net/usfraud.html

If you don't assume that everything you 'know' is true, you might actually learn what is really true.

At any point in time, the amount of debt principal and interest due is greater than the amount of money in existence to pay it. That is not an opinion. That is a fact.

Hatha

[palani]

Go into any bank. Ask the manager "At the end of the day do your books balance?" and I will guarantee he will tell you they do. Between the start of the day and the end he might have issued $1,000,000 in loans (without a single dollar in cash crossing the counter). The paper he exchanged for the loans balance the loans given. The value is in the signature of the people promising to repay the loans.

Interest payments unbalance the books.

[Carl]

~ At any point in time, the amount of debt principal and interest due is greater than the amount of money in existence to pay it. That is not an opinion. That is a fact.

Hatha Well, considering that there is only $1.1 Trillion in legal tender money circulating, I would say that what you've said is very true.

[Bigjon]

Well, considering that there is only $1.1 Trillion in legal tender money circulating, I would say that what you've said is very true.

You guys are confused, it is really quite simple. Spending uses money, but isn't money.

I'm only talking about paying off a bank loan. If you want to talk about the national debt, treasury bonds and frn's that is another story. The Fed designed and operates the system to fail and wants you to believe this misinfo about not enough money to pay interest on a bank loan.

I've put it in such simple terms, that I can't make it any simpler.

You can believe crap, but its still crap.

[Bigjon]

Go into any bank. Ask the manager "At the end of the day do your books balance?" and I will guarantee he will tell you they do. Between the start of the day and the end he might have issued $1,000,000 in loans (without a single dollar in cash crossing the counter). The paper he exchanged for the loans balance the loans given. The value is in the signature of the people promising to repay the loans.

Interest payments unbalance the books.

Of course his books balance, that's how the system works.

Interest payments are made every day and at the end of the day the books balance.

You have contradictory statements.

[palani]

Spending uses money, but isn't money....You can believe crap, but its still crap.

http://i47.tinypic.com/jjodc5.jpg

In no world where you act as an agent for the Federal Reserve do you have the ability to alien a single dollar bill. You must be the owner to alien.

[palani]

Of course his books balance, that's how the system works.

Interest payments are made every day and at the end of the day the books balance.

You have contradictory statements.

If the books are balanced (you exchanged one thing of value for another) then what possible basis is there to charge interest?

[Carl]

You guys are confused, it is really quite simple. Spending uses money, but isn't money. ~ What do you call it when you spend but don't use money to do it, pay without paying?

[Bigjon]

Bigjon-- You need to revisit your assumption that the interest is INCLUDED in the amount borrowed. The amount borrowed is the principal. In order for you to pay your interest obligation, somebody else has to borrow money, and get it into circulation so that you can work for it and earn some of it to pay your interest obligation. As long as someone can borrow more money, there may be enough money for people to pay interest on their loans.

We are talking about debt-based money. All of it is borrowed into existence, but more of it is owed (debt) because of interest, than actually exists to pay it back. The way this system works, that amount owed beyond the money that is in circulation can never be paid back. Because of this, the whole system is a fraud--a giant ponzi scheme. This is what is behind the Global Financial Crisis. The tipping point has been reached. What happens next is that everyone will wake up (including you) and see this, and the confidence in the debt based fiat money will evaporate. This is why there is so much planning for Fema camps, and militarized police, and totalitarian government. They are planning for the big 'awakening'. People won't be happy when they finally understand how they have been defrauded not only by the money scheme, but by the 'Laws' that support it.

You might find it hard to believe, but the bankers already own everything. That happened in 1933 when the US declared bankruptcy. Read about that one here:

http://barefootsworld.net/usfraud.html

If you don't assume that everything you 'know' is true, you might actually learn what is really true.

At any point in time, the amount of debt principal and interest due is greater than the amount of money in existence to pay it. That is not an opinion. That is a fact.

Hatha

I can't make it any simpler so I'll just have to appeal to authority.

http://www.freedomforceinternational.org/freedomcontent.cfm?fuseaction=money_as_debt&refpage=issues

[Bigjon]

What do you call it when you spend but don't use money to do it, pay without paying?

That is not what I said.

How many times can a dollar be spent?

[Carl]

That is not what I said.

How many times can a dollar be spent? According to the latest figures I've seen, apparently hundred's of trillions of times.

[Golden]

Where hasn't all the money gone??

What money? Which money?

FRN's are not money. You can't own something that ain't yours to begin with.

Please be more specific.

[singular_me]

e.

Anyway, I'm just imagining how money "might" be used without it inevitably becoming a debt instrument.

It seems to me that money disappears as a consequence of a peoples inability to produce goods to exchange with one another.

money has always been a debt instrument. Ancient Greece under a full gold standard collapsed several times due to gov borrowing mostly caused by wars and for the sake of their grandiose architecture. Ancient Rome went down the road when mixing its gold/silver with other metals to finance the empire and that at least 50% of the population were slaves. Even gold couldnt prevent The Tulip Mania from going bust. And pro-gold venician bankers are responsible for the first world crash in the 1200-1300's

shortages and usury/credits up to one's ears go well along together.

Until sound economics isnt taught in high schools, the consequences of borrowing one's future is inevitable, I am afraid.

I am not adverse to paper money if issued without an interest and usury abolished. Fiat and hard currencies for savings should compete. If some can longer enrich themselves by putting others into debts, that's already something. I agree with the maker of "the money masters", that are those who control the supply that matter.

[Bigjon]

According to the latest figures I've seen, apparently hundred's of trillions of times.

That is a truer statement than you know virtual money clearing via a mainframe down at the Fed.

Checkbook money doesn't need frn's to clear.

I used to fix those mainframes.

One other point, if money is scarcer because of the interest (I don't agree that money is scarcer, this is just conjecture.)

Than the value of the remaining money should go up. Less money equals more value.

That has never happened in my lifetime.

[FreeEnergy]

That is a truer statement than you know virtual money clearing via a mainframe down at the Fed.

Checkbook money doesn't need frn's to clear.

I used to fix those mainframes.


More details? :)




One other point, if money is scarcer because of the interest (I don't agree that money is scarcer, this is just conjecture.)

Than the value of the remaining money should go up. Less money equals more value.

That has never happened in my lifetime.

Because the way TPTB makes the quickest money is not by just charging interest (although that's probably the MOST money).

But by being first guys in to a giant money hose (money printing, tax dollars distributed etc.).

The closer you are to the money hose, the money you get - DOD, guaranteed contracts, large commecial banks that get first stab at FED's money. etc.

The way this works is that you don't make the hose smaller, NEVER. You always MAKE THE HOSE BIGGER, so you and your buddies be first to grab more.

This is why they want to be politicians, they want proximity to the hose (probably now $Trillions , if not tens of trillions, per year).

-

[Bigjon]

More details? :)




Because the way TPTB makes the quickest money is not by just charging interest (although that's probably the MOST money).

But by being first guys in to a giant money hose (money printing, tax dollars distributed etc.).

The closer you are to the money hose, the money you get - DOD, guaranteed contracts, large commecial banks that get first stab at FED's money. etc.

The way this works is that you don't make the hose smaller, NEVER. You always MAKE THE HOSE BIGGER, so you and your buddies be first to grab more.

This is why they want to be politicians, they want proximity to the hose (probably now $Trillions , if not tens of trillions, per year).

-
Checkbook money only needs a positive entry in a ledger. No frn's

What you say is very true the closer you are to the money source the more value it has, but you guys are saying that the longer we pay interest the less money there is and that is just not so.

[Hatha Sunahara]

We seem to be building the Tower of Babel here. Our politicians don't understand debt based money either.

I'm looking at the logic of the system, not the mechanics. Charging interest on money they conjure up out of thin air, and then failing to create the money that is used to pay that interest will result in you owning the entire world, and everyone being permanently indebted to you. Everyone will be your slave. There is a fellow in Australia named Larry Hannigan who wrote a story called I Want the Earth Plus 5%. You can read it here:

http://www.larryhannigan.com/EarthPlus.htm

or just listen to it, because it plays an audio of it for you. (You can turn the audio off if you like)

Or for people who like animation, there is a series of You Tube Videos of this story:

http://www.youtube.com/watch?v=no0Y0RVrWFM

http://www.youtube.com/watch?v=no0Y0RVrWFM

And links to the rest of this series.

http://www.youtube.com/watch?v=XkdMIr_Pv9U


http://www.youtube.com/watch?v=XBF4DpIkTSQ


http://www.youtube.com/watch?v=sF_bpO6mSHU


http://www.youtube.com/watch?v=8mpQGx1BRnI



Hatha

[Golden]

Checkbook money only needs a positive entry in a ledger. No frn's

What you say is very true the closer you are to the money source the more value it has, but you guys are saying that the longer we pay interest the less money there is and that is just not so.

To create legal checkbook money one must be a member to the federal reserve system.

The longer you pay interest the longer you subsidize the behavior. Did I hear bailout? You never learn your lesson if you only lose other peoples money. A rolling loan gathers no loss.

[Bigjon]

To create legal checkbook money one must be a member to the federal reserve system.

The longer you pay interest the longer you subsidize the behavior. Did I hear bailout? You never learn your lesson if you only lose other peoples money. A rolling loan gathers no loss.

You don't have a bank account?

[Carl]

That is a truer statement than you know virtual money clearing via a mainframe down at the Fed. My statement wasn't true at all. Base money has next to nothing to do with credit expansion.



Than the value of the remaining money should go up. Less money equals more value.

That has never happened in my lifetime.
Yep it would be nice if the system worked that way because if it did, Iceland would have the most valuable currency on the planet.

[Bigjon]

We seem to be building the Tower of Babel here. Our politicians don't understand debt based money either.

I'm looking at the logic of the system, not the mechanics. Charging interest on money they conjure up out of thin air, and then failing to create the money that is used to pay that interest will result in you owning the entire world, and everyone being permanently indebted to you. Everyone will be your slave. There is a fellow in Australia named Larry Hannigan who wrote a story called I Want the Earth Plus 5%. You can read it here:

http://www.larryhannigan.com/EarthPlus.htm

or just listen to it, because it plays an audio of it for you. (You can turn the audio off if you like)

Or for people who like animation, there is a series of You Tube Videos of this story:

http://www.youtube.com/watch?v=no0Y0RVrWFM

http://www.youtube.com/watch?v=no0Y0RVrWFM

And links to the rest of this series.

http://www.youtube.com/watch?v=XkdMIr_Pv9U


http://www.youtube.com/watch?v=XBF4DpIkTSQ


http://www.youtube.com/watch?v=sF_bpO6mSHU


http://www.youtube.com/watch?v=8mpQGx1BRnI



Hatha

You have one problem, you are wrong.

When you make your payment to the banker part is principal and part is interest. The banker spends the interest portion. the money is now back in the economy for you to earn again to make your next payment.

This cycle repeats month after month.

[Bigjon]

My statement wasn't true at all. Base money has next to nothing to do with credit expansion.


I thought you were answering my question, how many times can you spend a dollar?

You never indicated anything about credit expansion.

[Golden]

You don't have a bank account?

You cannot cash a Treasury check without one.

[Glass]

Checkbook money only needs a positive entry in a ledger. No frn's

What you say is very true the closer you are to the money source the more value it has, but you guys are saying that the longer we pay interest the less money there is and that is just not so.

When you pay a debt, the money that debt represents disappears from circulation. The debt is paid, extinguished, It no longer exists. It cannot be counted as money. That is why the economy "shrinks" in a recession/depression. Because the debt is either being paid down or written of due to default or renegotiation. There is no expansion of debt (CPI/Inflation). When this happens and people keep paying down their debt the amount of money in the system shrinks.

Be clear about this also. Banks do not lend money. The money they have on deposit is held on deposit to help meet their leverage requirements. It is not lent or loanded. A requirement might be, that for every $10 of debt they carry, they have to carry $1 in real non debt money. In your for instance that might also be the interest money they have been paid.

If the interest money was paid in debt money (it is becaise there is only debt money), that just means over all debt money quantity (the economy) did not shrink by that quantity that was redirected to interest payment.

I had a nother point to make but can't recall it just at the moment.

[Carl]

I thought you were answering my question, how many times can you spend a dollar?

You never indicated anything about credit expansion. Sorry. Here's a couple visual aids to help determine if people spending the base money supply can effectively explain the hundreds of trillions in credit creation.


2921

2922

[palani]

The money they have on deposit is held on deposit to help meet their leverage requirements.
The asset a bank retains is the note or mortgage. A $100,000 note permits $1,000,000 to be loaned in fractional reserve banking.

[Bigjon]

The asset a bank retains is the note or mortgage. A $100,000 note permits $1,000,000 to be loaned in fractional reserve banking.

Current actual reserve requirements (http://www.federalreserve.gov/monetarypolicy/reservereq.htm) are much lower than 10 percent. They are more like 1.5 percent now.

In actuality I have heard knowledgeable people say that with all the swaps and other financial chicanery there are NO reserve requirements.

[Sparky]

Bigjon makes a valid point that seems to be falling on deaf ears.

Where does the money come from to pay interest? Through new productivity.

If the banker loans me $100 and I have to pay him back $110, where will the extra $10 come from? If this is a closed system, once I make a payment of $10, I can then charge him ten bucks to shine his shoes, which he can pay me with the payment I just gave him. This was Bigjon's point. Isn't this correct?

[vacuum]

I can't make it any simpler so I'll just have to appeal to authority.

http://www.freedomforceinternational.org/freedomcontent.cfm?fuseaction=money_as_debt&refpage=issues

Ok, I've thought about this and I think I understand this a little more now. Previously we talked about this and I kind of reluctantly agreed with what you were saying, but now I can see that it is actually the case that the system is rigged in the way that Money as Debt described. Let me explain.

Lets go with the scenario in the link where a $10,000 dollar loan is made. $10,000 of new money is created when you sign your name on the dotted line and receive the deposit, and you spend it into the economy immediately.

You make the $980 payments, $900 of which is from your regular job and goes towards principal, and $80 of which is from working for the bank on the side, and happens to be the the same as the portion of the interest.

Now it appears that there is a net zero effect because you are removing the $10,000 you originally put into the economy and the bank is recycling the interest money. Once the loan is paid off, the $10,000 ceases to exist, whereas the interest money continues to exist in the economy. The interest was neither created nor destroyed in the process.

But here is a very important point. The interest was taken from the economy's money supply temporarily to allow the loan to be paid off. Then it was released back into the money supply. However, in order to pull the interest out of the money supply, there has to be liquidity in the economy - extra money out there. That extra liquidity in the economy is of course debt money.

So as more and more loans are paid off, a certain buffer of free money must exist out there. That debt money will itself have to be paid back at an interest rate, so the whole thing must grow - the required liquidity in the economy requires more loans which require more liquidity.

[Bigjon]

Bigjon makes a valid point that seems to be falling on deaf ears.

Where does the money come from to pay interest? Through new productivity.

If the banker loans me $100 and I have to pay him back $110, where will the extra $10 come from? If this is a closed system, once I make a payment of $10, I can then charge him ten bucks to shine his shoes, which he can pay me with the payment I just gave him. This was Bigjon's point. Isn't this correct?

That is essentially correct.

Another illustration:

Assume an island with only two people, one with nothing and one with all the wealth. The wealthy man has various tools, all the land and assets including 100 gold coins which are the only coins on the island.

Suppose the man with nothing makes a deal with the wealthy man in the hopes of bettering himself. He takes a loan from the wealthy man for 100 gold coins with a promise to pay back 110 gold coins in 5 years. Now it might seem to some that the poor man was fooled because the island only has 100 gold coins and to pay back the loan it would seem there needs to exist 110. However there is actually no problem because work itself has value.

Here is how the impossible loan payback happens:

The man uses his 100 coins loan productively to buy land, tools, etc. from the rich man. He works and produces food and other things of value which he sells to the rich man for 23 gold coins a each year. Each year he pays 22 coins toward the loan and keeps 1 himself. The number of coins always remained the same yet in 5 years the man paid off his 110 coin debt and owns land, tools, and 5 gold coins. The rich man has 95 coins plus the items of value the man produced with his work. The poor man's work added value into the closed island system that makes up for the loan interest plus more.

People forget that the coins are only representations and storage of work/value--in the end work is what produces the real value.

The little story is also a good example of how not all debt is bad. Productive debt can be good.

[Bigjon]

Ok, I've thought about this and I think I understand this a little more now. Previously we talked about this and I kind of reluctantly agreed with what you were saying, but now I can see that it is actually the case that the system is rigged in the way that Money as Debt described. Let me explain.

Lets go with the scenario in the link where a $10,000 dollar loan is made. $10,000 of new money is created when you sign your name on the dotted line and receive the deposit, and you spend it into the economy immediately.

You make the $980 payments, $900 of which is from your regular job and goes towards principal, and $80 of which is from working for the bank on the side, and happens to be the the same as the portion of the interest.

Now it appears that there is a net zero effect because you are removing the $10,000 you originally put into the economy and the bank is recycling the interest money. Once the loan is paid off, the $10,000 ceases to exist, whereas the interest money continues to exist in the economy. The interest was neither created nor destroyed in the process.

But here is a very important point. The interest was taken from the economy's money supply temporarily to allow the loan to be paid off. Then it was released back into the money supply. However, in order to pull the interest out of the money supply, there has to be liquidity in the economy - extra money out there. That extra liquidity in the economy is of course debt money.

So as more and more loans are paid off, a certain buffer of free money must exist out there. That debt money will itself have to be paid back at an interest rate, so the whole thing must grow - the required liquidity in the economy requires more loans which require more liquidity.

You are making it way more complicated than it is. See Sparky's post.

[Hatha Sunahara]

Bigjon makes a valid point that seems to be falling on deaf ears.

Where does the money come from to pay interest? Through new productivity.

If the banker loans me $100 and I have to pay him back $110, where will the extra $10 come from? If this is a closed system, once I make a payment of $10, I can then charge him ten bucks to shine his shoes, which he can pay me with the payment I just gave him. This was Bigjon's point. Isn't this correct?

The bankers don't spend that money. They use it as reserves so they can lend out more money. That's how they wind up owning everything.

Hatha

[Sparky]

The bankers don't spend that money. They use it as reserves so they can lend out more money. That's how they wind up owning everything.

Hatha
Of course they spend some of it. What's the point of being a rich banker if you can't spend any of the money you squeeze out of people? It's why they don't shine their own shoes.

[Bigjon]

The bankers don't spend that money. They use it as reserves so they can lend out more money. That's how they wind up owning everything.

Hatha

Who needs reserves? (http://gold-silver.us/forum/showthread.php?61550-Where-has-all-the-money-in-the-world-gone&p=548282&viewfull=1#post548282)



They wind up owning everything and still spending the interest besides. They have a lot of congress critters to buy and buy they do.

You are creating special requirements on the bankers that doesn't model how the system really works.

[vacuum]

You are making it way more complicated than it is. See Sparky's post.
See below [..also see my sig]


Bigjon makes a valid point that seems to be falling on deaf ears.

Where does the money come from to pay interest? Through new productivity.

If the banker loans me $100 and I have to pay him back $110, where will the extra $10 come from? If this is a closed system, once I make a payment of $10, I can then charge him ten bucks to shine his shoes, which he can pay me with the payment I just gave him. This was Bigjon's point. Isn't this correct?

This is correct but irrelevant. This is an example of an individual paying off his loan which happens all the time. The claim is about the impossibility of everyone being able to pay off their loans.

The problem is that the bank cannot create $10 by itself and pay you for services. Someone has to take out a loan before that money comes into existence. So all you've said is "I can pay off my loan as long as someone else somewhere creates $10 for me"

My previous post is not incorrect.

[Book]

http://www.cityofsound.com/photos/uncategorized/2007/10/29/dresden_aftermath.jpg

During WWII lets imagine that Germany and Japan and the USA all "borrowed" to fund the war. Germany and Japan were bombed back into the stone age. Obviously Germany and Japan did not repay their war "loans".

??? who actually lost that money? Where did that money go?

[D sciple]

Island, 2 dudes, 100 gold coins, 1 guys owns everything. You said loan to guy 1 with interest was good for him, he added value with work and ended up owning land- paraphrased


This whole subject (thread) is pretty convoluted fwiw, lotta code words to dice through.

But your story is pretty interesting in this regard:

The only value in this scenario is work (as you said) and land (because of food). Guy number 2 could give all the gold to guy 1, and still have him by the balls. "Hey guy no.1, you wanna eat tonight? Do whatever I say." That is, assuming violence isn't an option. The gold here is worthless. The land is basically priceless.

Any time, for any reason, guy 2 gives land to guy 1; it's charity.

[Glass]

The asset a bank retains is the note or mortgage. A $100,000 note permits $1,000,000 to be loaned in fractional reserve banking.

The banks sell the note or mortgage. They asign an interest in it. They then hold the funds obtained from the interests as an asset base for further leveraging. This is the system they deployed in the mid 1970's. They call it debt monetization.

In the old-er days they held the note as an asset and lent the money they had on deposit to fund the loans. This is why I say Banks don't lend money......now. In old curious historical irrelevant fact land, the way you described was the way it was done.

[palani]

The banks sell the note or mortgage. They asign an interest in it.

Most cases I have heard the notes/mortgages that are sold do so in a bundle and 1-2% profit is taken the same day as closing occurs. Losing the originals mean the bank no longer has a right to expect performance on the note. Neither can they demand performance. It is the original signature that creates the value not some copy whether certified or not.

Point is, the notes/mortgages are sold to other banks who need assets on THEIR books so that THEY can loan out 10x the money. Even though these other banks have standing to collect on the note/mortgage as they hold the originals they never do because they make a huge amount of money just holding it as an asset. Or the bundled notes/mortgages might be sold to China as repayment for the deficit of trade.

The only hole in this theory is ... if the bank(s) out there making so much money by loaning fake money ... why are so many in trouble?

[Bigjon]

See below [..also see my sig]



This is correct but irrelevant. This is an example of an individual paying off his loan which happens all the time. The claim is about the impossibility of everyone being able to pay off their loans.

The problem is that the bank cannot create $10 by itself and pay you for services. Someone has to take out a loan before that money comes into existence. So all you've said is "I can pay off my loan as long as someone else somewhere creates $10 for me"

My previous post is not incorrect.

You like all the others are saying something that is patently absurd that the amount of money in the system must equal the amount of spending.

The only place where the money can be extinguished is at the bank where the loan papers are at and we know bankers charge interest in order to spend interest. Not much point in charging interest if you can't spend it. Sure money can disappear, you have Alzheimer's and you buried it in your backyard and forgot that you did, but that isn't extinguished money.

Once the banker spends the interest it is back in the economy where you can earn it through your labor to make your payment to the banker.

[Bigjon]

http://www.cityofsound.com/photos/uncategorized/2007/10/29/dresden_aftermath.jpg

During WWII lets imagine that Germany and Japan and the USA all "borrowed" to fund the war. Germany and Japan were bombed back into the stone age. Obviously Germany and Japan did not repay their war "loans".

??? who actually lost that money? Where did that money go?

As I understand this, it didn't go anywhere, it is still being carried on the books and used as a club over those nations.

[Bigjon]

This whole subject (thread) is pretty convoluted fwiw, lotta code words to dice through.

But your story is pretty interesting in this regard:

The only value in this scenario is work (as you said) and land (because of food). Guy number 2 could give all the gold to guy 1, and still have him by the balls. "Hey guy no.1, you wanna eat tonight? Do whatever I say." That is, assuming violence isn't an option. The gold here is worthless. The land is basically priceless.

Any time, for any reason, guy 2 gives land to guy 1; it's charity.

It is a story that illustrates how labor and productivity can be used to repay a loan with a fixed amount of money and an amount of spending in excess of that amount of money.

It is pretty simple.

I hope none of you guys take calculus.

[Bigjon]

Most cases I have heard the notes/mortgages that are sold do so in a bundle and 1-2% profit is taken the same day as closing occurs. Losing the originals mean the bank no longer has a right to expect performance on the note. Neither can they demand performance. It is the original signature that creates the value not some copy whether certified or not.

Point is, the notes/mortgages are sold to other banks who need assets on THEIR books so that THEY can loan out 10x the money. Even though these other banks have standing to collect on the note/mortgage as they hold the originals they never do because they make a huge amount of money just holding it as an asset. Or the bundled notes/mortgages might be sold to China as repayment for the deficit of trade.

The only hole in this theory is ... if the bank(s) out there making so much money by loaning fake money ... why are so many in trouble?

They are in trouble because they have so many non-performing loans that have to be written off. There are two sides of the banks ledger, the customers side and the banks side. Loans that are written off come off the banks side of the ledger ergo the banks have no money to pay all the customers claims.

[Santa]

http://www.cityofsound.com/photos/uncategorized/2007/10/29/dresden_aftermath.jpg

During WWII lets imagine that Germany and Japan and the USA all "borrowed" to fund the war. Germany and Japan were bombed back into the stone age. Obviously Germany and Japan did not repay their war "loans".

??? who actually lost that money? Where did that money go?


War is used to reset the "monetary" value of the product of Human labor by destroying it.

War creates a condition of scarcity of the products of human labor.

All that amazing energy and enterprise that people accomplish over the centuries as a society doesn't just evaporate,
it has to be destroyed, or at least hidden(CAFR?) in order for production by labor to maintain its artificially contrived monetary value.

[Horn]

All that amazing energy and enterprise that people accomplish over the centuries as a society doesn't just evaporate,
it has to be destroyed, or at least hidden(CAFR?) in order for production by labor to maintain its artificially contrived monetary value.

I get a similar response when talking to some of the old timers in these parts about currency debasement.

They say at least they aren't creating more World Wars.

[palani]

They are in trouble because they have so many non-performing loans that have to be written off.
Every good scam needs a cover story. The fact is banks don't deal in reality. The commerce world is entirely based upon fiction. Evidence Bernie Madoff. Think of all the good feelings he left his clients with over many years. They were snug in the illusion that they were making money hand over fist. The fact is there is no money in circulation and you are left with an illusion that you actually own anything. Ownership in dream land is an impossibility.

[Bigjon]

Every good scam needs a cover story. The fact is banks don't deal in reality. The commerce world is entirely based upon fiction. Evidence Bernie Madoff. Think of all the good feelings he left his clients with over many years. They were snug in the illusion that they were making money hand over fist. The fact is there is no money in circulation and you are left with an illusion that you actually own anything. Ownership in dream land is an impossibility.

What you say is very true, if we were using honest accounting standards most of our banks would not exist, but the Jews own all the players with whistles. They won't blow the whistle until they have the situation they want.

Or I should say they only blow the whistle when they want to put away the goyim.

[Santa]

Here's another thought.

There are around 7 billion people on earth that with modern technologies are barely maintained within the current monetary system using the labor requirements of a few hundred million. This leaves about 6.5 billion people without any ability to convert their labor into a marketable commodity. That is, within this current market paradigm or modality.

This crazy imbalance has been expanded and held together to a large degree by what is called intellectual property.

In other words, if you can transform a concept into a commodity, you can still earn money in today's market.

But even that possibility will become impossible within a few short years with the advent of AI.

Before you or I even have a chance of spitting out an idea, AI will already have put it into production,
thus eliminating any chance of competition completely.

[vacuum]

Once the banker spends the interest it is back in the economy where you can earn it through your labor to make your payment to the banker.

But you keep ignoring the timing aspect of interest. The banker can only spend the interest back into the economy after he collects it. How can he collect it in the first place unless another person has already created the money?

[Santa]

Cash is being funneled into the pockets of a smaller and smaller segment of society. The scientific technocracy.

The digital numbers keep expanding, but the actual currency is contracting into fewer and fewer hands.

The more scarce the currency becomes, the more the population needs it to survive, causing them(us)(you)(me)
to behave like rabid starving junkyard dogs tearing at each others throats for the entertainment of the overlords
from hell, who enjoy the human wails of agony and gnashing teeth. It makes feel them big and strong.

That whole Helicopter Ben firing up the printing press thing is pure bullshit. They don't want us to hold cash anymore.
They want us to get with the program. They want us wired to the machine.

The machine is the Beast.

[Bigjon]

But you keep ignoring the timing aspect of interest. The banker can only spend the interest back into the economy after he collects it. How can he collect it in the first place unless another person has already created the money?

You created the money, when you signed the note. The banker then "gives" you a checkbook and puts an entry into the ledger that says you have xxx dollars. You then use the money by writing a check. Your first payment doesn't occur until xx days after the money was created.

The money creation comes first, then comes the payment.

[EE_]

Cash is being funneled into the pockets of a smaller and smaller segment of society. The scientific technocracy.

The digital numbers keep expanding, but the actual currency is contracting into fewer and fewer hands.

The more scarce the currency becomes, the more the population needs it to survive, causing them(us)(you)(me)
to behave like rabid starving junkyard dogs tearing at each others throats for the entertainment of the overlords
from hell, who enjoy the human wails of agony and gnashing teeth. It makes feel them big and strong.

That whole Helicopter Ben firing up the printing press thing is pure bullshit. They don't want us to hold cash anymore.
They want us to get with the program. They want us wired to the machine.

The machine is the Beast.

One step closer

http://i2.cdn.turner.com/money/2011/10/25/technology/square_payments_walmart/square-card-swipe.top.jpg

[D sciple]

...

[Bigjon]

Cash is being funneled into the pockets of a smaller and smaller segment of society. The scientific technocracy.

The digital numbers keep expanding, but the actual currency is contracting into fewer and fewer hands.

The more scarce the currency becomes, the more the population needs it to survive, causing them(us)(you)(me)
to behave like rabid starving junkyard dogs tearing at each others throats for the entertainment of the overlords
from hell, who enjoy the human wails of agony and gnashing teeth. It makes feel them big and strong.

That whole Helicopter Ben firing up the printing press thing is pure bullshit. They don't want us to hold cash anymore.
They want us to get with the program. They want us wired to the machine.

The machine is the Beast.

Not what I see happening. There is a lot of money available, IF you have a job.

They have eliminated most of our productive industries and our jobs.

If money supply were shrinking we would have deflation and prices would have to fall as the value of the currency would rise.

Less money higher value, more money less value.

I agree they want to eliminate cash and they want to track our every purchase.

We need to set up our own money systems and let theirs rot.

[Santa]

Not what I see happening. There is a lot of money available, IF you have a job.

They have eliminated most of our productive industries and our jobs.

I agree they want to eliminate cash and they want to track our every purchase.

We need to set up our own money systems and let theirs rot.

IF you have a job, you're still serving the purpose of technician or functionary to the scientific technocracy.
I wouldn't get too cozy though. Jobs are dropping like leaves in late summer. In a month or two, metaphorically speaking, the money tree might be stripped bare, leaving only the most essential infrastructure required to maintain the Beast.


If money supply were shrinking we would have deflation and prices would have to fall as the value of the currency would rise.


You're basing this on supply and demand in a free enterprise system or something similar. Our system is a computer controlled fascist monopoly in which shelf prices are determined for psychological military strategic advantages. Where every important commodity is controlled by the same production and distribution network.

If it isn't completely locked in position yet, it's only a matter of time, and the economy is just one game piece in the game being played to give them time to complete the framework.

Of course I'm only giving my opinion. Actually, I hope I'm wrong.

[k-os]

This is an excellent discussion, guys! I particularly enjoyed the story of the two men on the island. What I think would be more realistic though is perhaps 5 people on the island and only 2 paying back their loan completely, and 2 partially repaying their loan or not repaying at all.

The idea of war/destruction for the purpose of creating scarcity and the need for spending is quite interesting (and disturbing). It made me think of the cash for clunkers deal that helped the car industry, not only because it provided individuals with cash that had to be used for new cars, but the old cars were also completely destroyed, taking them off the market.

I agree that more money is going into fewer hands, and because of that, less money is being spent. (I think.) I mean, when one person has a billion dollars, they still buy and maintain only so many cars, so many houses, so many pairs of shoes and eat so many meals, etc. However, when a million people have $1000 each, most of it will be spent on food, shelter, transportation, electricity, education, entertainment, etc., with a small fraction saved.

[Bigjon]

People can't hardly understand the illustration of how money and spending are different with only 2 people and you want them to understand with 5 people?

You are in charge of writing it.

Example number one, below.

[D sciple]

Here's a post I posted but retracted because I'm not sure if it really addresses the question. Like, anyway I slice it, I don't see how the concept of money cannot be corrupted. -


It is a story that illustrates how labor and productivity can be used to repay a loan with a fixed amount of money and an amount of spending in excess of that amount of money.

But it was all UTTER BULL SHIT

To recap:

Guy without anything started out as a total slave. He had to do whatever the other guy wanted when the story started or die (or fight, but we're assuming they're civil *rolleyes*).

The Gold was worthless, except maybe melting it down into a knife.

After guy 2 loans 100 gold coins to guy 1, knowing they amount to the value of a knife, you really think he then is going to give him land and tools for those coins knowing they are worthless? Just to get his worthless coins back and lose all his labor he got from guy 1 at any price he wanted?

The land was/is priceless and amount to total independence.

The crap that guy 1 created, or value you're saying he added, is only taking stuff out of the ground for food, or forming the metals (in it) into something useful (to aid in farming most importantly).


But yea, we're all aware that if you receive a loan of something at 5 percent interest, then loan it out at 10 percent interest, you'll show a profit. And someone else might take that 10 percent loan, if they think they can make a higher ROI to cover the "Juice". But...if you're not a con man, or good at picking off tards who don't understand value.... The only way you can extract value legitimately is by taking it out of the ground. Whether it be food, or forming metal into a tool. If you don't have land, your labor is cheap, because you're in no position to negotiate.

I'm Tom Cruise, and you're Rainman at best. The whole purpose of your story failed because you couldn't understand value at all. It all hinged on guy 2 (the rich guy) being a complete and utter retard.

[palani]

But yea, we're all aware that if you receive a loan of something at 5 percent interest, then loan it out at 10 percent interest, you'll show a profit.

Usury is not lawful. Usury is legal if it stays within limits. Lawful is a much higher standard than legal.

[Horn]

What is currently happening is money is being debased thru credit availability in one part of the world, with the remaining credibility of the other.

With the end goal seeming to be that nobody will have credibility.

My guess is machines eat themselves, up to this point man only seems to be able to create new machines with war in mind.

[Sparky]

http://gold-silver.us/forum/images/misc/quote_icon.png Originally Posted by Bigjon http://gold-silver.us/forum/images/buttons/viewpost-right.png (http://gold-silver.us/forum/showthread.php?p=548327#post548327)
It is a story that illustrates how labor and productivity can be used to repay a loan with a fixed amount of money and an amount of spending in excess of that amount of money.





But it was all UTTER BULL SHIT
...

No, no, I think Bigjon has this essentially correct. Fiat represents a claim to future productivity, in the same way that all credit is a claim to future productivity. Fiat and credit are not intrinsically bad, but they are subject to easy abuse by a small number of people. The abuse is what leads to the concentration of wealth.

The supply of fiat and credit needs to match a reasonable amount of claim on future productivity. If I am a shoe shiner, I can reasonably shine enough extra shoes (above and beyond the shoes I need to maintain my current budget) to pay back ten bucks in interest. But there's a tipping point as to how much I could borrow before I can't possibly shine enough shoes to pay it back.

This is what happened in the housing market. People were loaned more money than they possibly had the means to pay back, even if they were to maximize their productivity over the rest of their lives. This is what is happening with personal debt, and with sovereign debt. The lenders, who are essentially exploiting the borrowers (as you have pointed out), killed the golden goose by poorly matching risk with interest rate. Worse, they then pawned the deal off on a whole other set of suckers, like domestic pension plans or sovereign countries.

So this discussion is mixing up a couple of different issues: The first is the fundamentals of fiat and credit. The second is how bankers and other powers exploit the system at the expense of the masses. I think bigjon is correct in trying to make this distinction.

P.S. Bigjon also makes the important point that too many people now aren't being given the opportunity to be productive.

[D sciple]

Hmm, I'm glad I don't really have to figure this out. That is; if money can ever work, let alone interest.

All I gotta do is law of Moses up and I'm gold (:)) (Matt 5:17)

But (for fun) what about the question of owning land that you have to pay taxes on, or owning land in the U.S.; does it equal independence? (like the island story, where if I wanted to do work for someone else and the price they offered was bad, I could say no and live fine, giving me negotiating power; IF I had a portion of the land)

I mean, if I have to pay property tax, income tax etc., what does this change?

Well, essentially I'd be a low rate renter. But since money isn't based on anything I can control, and its value is subject to the whims of TPTB, it's like....how do I know I can sell like 10 percent of the food I grow to cover it tomorrow?

What if everyone was so damn broke, they couldn't buy my corn, and I NEED to now sell that shit to cover this tax? Or I have to sell HALF my crops just to cover this tax. Now I'm f'ed.

That's why we gotta slay everyone in sight (well the dissenters, where stipulated), law of Moses style, divide the land (num 33:54), stop legislating (deut 4:2), and pay the simple feast taxes, which are 10 percent of produce.

Bada bing: God's happy, I get to lay heads out for fun, and ultimately get free land and be free.

[palani]

Bada bing: God's happy, I get to lay heads out for fun, and ultimately get free land and be free.

During the Vietnam war profitable plantations were broken up and the land divided among the lower classes. The theory was the reason they wanted to be communist was they had no land of their own. It really didn't turn out well. The ones who wanted land just wanted the wealth that they viewed went with it. These people were not prepared for the work required to make it produce.

[D sciple]

During the Vietnam war profitable plantations were broken up and the land divided among the lower classes. The theory was the reason they wanted to be communist was they had no land of their own. It really didn't turn out well. The ones who wanted land just wanted the wealth that they viewed went with it. These people were not prepared for the work required to make it produce.

Meh. The great thing about it is, It isn't even an option (law in general, choose life or death). Nothing else is even valuable too, as I've harped on repeatedly.

But, c'mon. Get a few sheep, let them graze, and you got meat and clothes. Bury some seeds. How could someone f that up? There are some agriculture laws as well. The only one I can remember atm is no growing on the 7th year. I suppose that replenishes the soil somehow?

First year or 2 would be tough, but after that; cakewalk. Also, anyone who wants to tard up their life can still sell their land and work for someone else. Your kids would curse you, (because it's a bad move) but the law comes to the rescue and the land is returned to your family after 50 years.

[TheNocturnalEgyptian]

First year or 2 would be tough, but after that; cakewalk. Also, anyone who wants to tard up their life can still sell their land and work for someone else. Your kids would curse you, (because it's a bad move) but the law comes to the rescue and the land is returned to your family after 50 years.


Ah yes, this part is especially interesting, in the west we no longer have the concept of permanent ownership. If I truly own something, then I can sell it in total.

[D sciple]

Ah yes, this part is especially interesting, in the west we no longer have the concept of permanent ownership. If I truly own something, then I can sell it in total.

I can recall coming across laws where the Jubilee, or 50 year return, doesn't apply for CITY domiciles. The British Crown descends from David, so the Queen and the counterfeit Jews (Rev 2:9, Jer 11:9) are still running the show with some allusion to the law (Talmud, Babylonian Law?). Perhaps in their mind, everything is declared a city, so it's cool?

[FreeEnergy]

if the bank(s) out there making so much money by loaning fake money ... why are so many in trouble?

Because every bank is already bankrupt from day one of operation, once they start fractional reserve and giving out "loans". From there on, they technically owe more than they can repay, and should be declared insolvent. I am under the opinion that large commercial banks are bankrupt anyway, so it is all big show for all of you to think they are not. The operation is designed to funnel money into private equity and buy up properties and companies - not on the balance of the bank, no duh that would be dumb, but on to the balance of other companies banker controls.

[FreeEnergy]

http://www.cityofsound.com/photos/uncategorized/2007/10/29/dresden_aftermath.jpg

During WWII lets imagine that Germany and Japan and the USA all "borrowed" to fund the war. Germany and Japan were bombed back into the stone age. Obviously Germany and Japan did not repay their war "loans".

??? who actually lost that money? Where did that money go?

As usual, book missed.

Japan has been raping Asia for 50 years from early 1900th up to the end of the war. There was no war on Japan's soil. The only place where they suffered serious damage was Hiroshima and Nagasaki, from 2 A-bombs. Total casualties for both cities (including insured) estimated to be 200,000. Nothing to be much proud of, Soviet Union lost 20+ million in that war.

So, Japan looted Asia, took all the gold. Remember, India and China plus lots of others... Korea too. All of them have no formal banking system or people do not trust banks, so lots of gold and silver...looted by Japan.

Why do you think an island nation without resources is number 2 economy in the world (was just barely overtaken by China)?

[FreeEnergy]

During the Vietnam war profitable plantations were broken up and the land divided among the lower classes. The theory was the reason they wanted to be communist was they had no land of their own. It really didn't turn out well. The ones who wanted land just wanted the wealth that they viewed went with it. These people were not prepared for the work required to make it produce.

palani, they expected it not to work well, communist bankers behind the scenes know it.
The same thing was done in Russia after banker-financed and jew-executed communist revolution. in farming, they took away good farms and killed more prosperous farmers and "divided the land among poorer" (classic banker communism). of course them being jew knew this isn't going to work, in the past poor just drank happy and sold of their land eventually for debt and booze. So the commie "government" took all the land, and poor went to work to city factories.

[Bigjon]

Because every bank is already bankrupt from day one of operation, once they start fractional reserve and giving out "loans". From there on, they technically owe more than they can repay, and should be declared insolvent. I am under the opinion that large commercial banks are bankrupt anyway, so it is all big show for all of you to think they are not. The operation is designed to funnel money into private equity and buy up properties and companies - not on the balance of the bank, no duh that would be dumb, but on to the balance of other companies banker controls.

Nonsense.

For every loan they make they have a note signed by a debtor, they have his down payment (which paid for the reserve, plus a little profit for the bank). and they have first lien on the thing he needed to borrow money to buy.

[FreeEnergy]

Bigjorn, true, but they technically didn't have the money. So it is fraud.

[Bigjon]

Bigjorn, true, but they technically didn't have the money. So it is fraud.

It's not fraud, because they plainly state the rules of the game and we play with our signature.

The banks are still technically solvent, because they changed the rules (this is fraud) in midstream and instead of marking to market the true value of their loans, they sold the loans to the Fed. The Fed bought them at full face value and carries them on their books.

[TheNocturnalEgyptian]

It's not fraud, because they plainly state the rules of the game and we play with our signature.

The banks are still technically solvent, because they changed the rules (this is fraud) in midstream and instead of marking to market the true value of their loans, they sold the loans to the Fed. The Fed bought them at full face value and carries them on their books.

So basically anything, no matter how asinine or dangerous, can be done by contract?

[Bigjon]

So basically anything, no matter how asinine or dangerous, can be done by contract?

If you think its fraud you have a simple choice... don't sign.

The only really big fraud I see is having a central bank issuing money, based on debt of the people.

The Government should issue the currency through the treasury as debt free money. They should fund public works with this debt free money.

[Bigjon]

Start your own bank (http://www.ehow.com/how_2062432_start-bank.html).


Create a plan for raising the required capital funds for your bank. Search for investors, grant programs and ways to earn money to back your bank's start up. Expect to be required to raise millions of dollars for your bank's start up. California, for example, requires charter banks to have between $6 million and $10 million dollars in capital funds before their doors open.

[palani]

Because every bank is already bankrupt from day one of operation, once they start fractional reserve and giving out "loans". From there on, they technically owe more than they can repay, and should be declared insolvent.
The institution of insolvency is reserved for people who desire to be responsible. You turn over all your assets and then are permitted to stay out of prison while you work off the remaining debt.

Bankruptcy on the other hand is where you declare that you never plan on meeting your obligations and rely upon the legal system to protect you from performance upon contracts you have engaged in.

The U.S. is bankrupt. In case this is not self-evident consider the Graham-Rudmann act from the early '80s in which congressional incompetence in coming up with a balanced budget required lower payments to federal contracts in violation of any agreement that was used to engage them in a contract.

Bankruptcy laws are federal because the states have agreed not to interfere with any contracts.

The FRN in your possession is evidence that you are bankrupt as well.

[palani]

So basically anything, no matter how asinine or dangerous, can be done by contract?

There are all kinds of contracts. Even quasi-contracts which are "false" contracts. Contracts may be express or implied. They may have documentation or not. If you have sufficient witnesses you have no need for monuments (paperwork).

The concept of contract runs through ALL activities man is capable of. A contract might be illegal and void but still lawful. [Legal is what is permitted ... license ... or title of nobility ... while lawful is what is NOT forbidden ... as growing plants for health related benefits].

[palani]

If you think its fraud you have a simple choice... don't sign.

Hard to do when a gun is held to your head. When dealing with the state and it's various organs and agents I sign "R.vi Et Armis" ... R for Rex the king, vi Et Armis ... under force and arms. I haven't had a signature refused yet.

[Horn]

The FRN in your possession is evidence that you are bankrupt as well.

bit stingy with the Thanks and gratefulness, Palani.


http://www.youtube.com/watch?v=LGdyVnW86SY

[Bigjon]

Hard to do when a gun is held to your head. When dealing with the state and it's various organs and agents I sign "R.vi Et Armis" ... R for Rex the king, vi Et Armis ... under force and arms. I haven't had a signature refused yet.

The context was bank loans and you don't have to have a bank loan.

But when it comes to the state you arecorrectomundo. (I can speak Latin too.)

[Hatha Sunahara]

Even if the people who accept your signature with R. vi Et Armis knew Latin, or even Law, what good does it do you? Are you expecting the nature of government to change in your lifetime? Are you expecting power to shift back to the sovereign individuals who live here? Or is it just your conscience that forbids you to sign under duress without making a peep? Or is it a gesture of contempt, showing them you know they are shoving this fraud down your throat?


Hatha

[Bigjon]

Even if the people who accept your signature with R. vi Et Armis knew Latin, or even Law, what good does it do you? Are you expecting the nature of government to change in your lifetime? Are you expecting power to shift back to the sovereign individuals who live here? Or is it just your conscience that forbids you to sign under duress without making a peep? Or is it a gesture of contempt, showing them you know they are shoving this fraud down your throat?


Hatha

I'm curious do you still believe your position that they didn't create the interest is correct or can you comprehend that when the banker spends the interest portion back into the economy all the money to pay the interest is still in the system?

Go look at an amortization table and add a column that says economy, then with a starting value of the loan amount first deduct the payment from the economy and then add a second line after each payment and add the interest paid to the banker back into the economy. You will find there is plenty of money to pay the loan with no additional borrowing.

[palani]

Even if the people who accept your signature with R. vi Et Armis knew Latin, or even Law, what good does it do you?

Withholding consent. The all capital name is misnomer anyway and that is who they THINK they are doing business with. I carry a business card with me as well that makes it clear I am not associated in any capacity with the Federal Reserve or their system of note-taking .. just in case NOTICE is required it may be given in writing without stumbling around with explanations.

A WWII vet was telling me of his experiences post war in Tokyo. He said that even defeated the crowds of Japanese he would meet on the sidewalk would make him divert his path rather than divert theirs. So he bounced one off his chest one time and he said it was like telepathy ... everyone walking toward him would divert their path to avoid him.

The same principle holds true when dealing with government agents. They really only want to do business with those who are docile and accept their authority. They have no desire to get liened up or worse (shot). I would prefer to gently nudge them into submission rather than declare all out war on them.

[Hatha Sunahara]

All the money in the world can only disappear to one place: that place from where it came. It is a reduction in the money supply. If you want to know where it went, read Potocol 20, Para 20 in the Protocols of Zion. Whoever has a monopoly on creating money, and controls its supply can constrict or bloat that supply, very easily if the money is all fiat. Do you know of any rules for what not to do, or what to do, if you are managing the money supply? There are no rules. This is a pretty important piece of 'group functionality' to be completely free of rules. Or even standards of behavior. Yet the people who perform this function are 'too big to fail'. Where would they go if they were not too big to fail?


Hatha

[Horn]

Whoever has a monopoly on creating money, and controls its supply can constrict or bloat that supply, very easily if the money is all fiat.
Hatha

With the advent of electric transfers that side of the game took on a whole new dimension. It would actually be the wisest of positions for the people to demand 100% of their $ positions to be stored locally at their branch.

It at least might generate some kind of economic activity with a new rule, the banks would need to store and protect their stash. And $500 bills would be required to save space.

[Hatha Sunahara]

I'm curious do you still believe your position that they didn't create the interest is correct or can you comprehend that when the banker spends the interest portion back into the economy all the money to pay the interest is still in the system?

Go look at an amortization table and add a column that says economy, then with a starting value of the loan amount first deduct the payment from the economy and then add a second line after each payment and add the interest paid to the banker back into the economy. You will find there is plenty of money to pay the loan with no additional borrowing.


I subscribe to the principle called Occams Razor. The simplest solution is the best. If you can distill an idea down to its simplest explanation, you have optimized knowldege. I'm not eloquent about it, so give Wikipedia a go on that one. Anyway, I see the banker's lending out money as principal only, and obliging the borrower to repay that principal plus interest. This works all well and fine as you say, so long as people are willing to borrow money, and the bankers are willing to lend it to them. What happens if people stop borrowing money? Loans will be repaid, the principal extinguished, and the money supply will shrink. And it will keep shrinking as long as people are not borrowing new money. Interest mostly has the function of transferring wealth (in the form of money) into the pockets of the bankers. It's secondary function is to regulate new borrowing. The bankers can also restrict the money supply by not lending if the demand exists. They do this by raising interest rates until demand drops. The supply of money however is determined by actual borrowing of money (new loans). The bankers don't create any actual money to cover the need people have to make their interest payments. People have to work to earn that money, and the value of their labor is thus transferred to the bankers using whatever money supply is available.

Banking is racketeering on a grand scale.


Hatha

[Bigjon]

Mortgage Amortization


















Inputs

Key Figures


Loan principal amount
$100,000.00

Annual loan payments
$7,983.60


Annual interest rate
7.000%

Monthly payments
$665.30


Loan period in years
30

Interest in first calendar year
$6,967.81


Base year of loan
2008

Interest over term of loan
$139,508.00


Base month of loan
january

Sum of all payments
$239,508.00













Payments in First 12 Months


Year
Month
Beginning Balance
Payment
Principal
Interest
Cumulative Principal
Cumulative Interest
Ending Balance


2008
Jan
$100,000.00
$665.30
$81.97
$583.33
$81.97
$583.33
$99,918.03



Feb
$99,918.03
$665.30
$82.44
$582.86
$164.41
$1,166.19
$99,835.59



Mar
$99,835.59
$665.30
$82.93
$582.37
$247.34
$1,748.56
$99,752.66



Apr
$99,752.66
$665.30
$83.41
$581.89
$330.75
$2,330.45
$99,669.25



May
$99,669.25
$665.30
$83.90
$581.40
$414.65
$2,911.85
$99,585.35



Jun
$99,585.35
$665.30
$84.39
$580.91
$499.04
$3,492.76
$99,500.96



Jul
$99,500.96
$665.30
$84.88
$580.42
$583.92
$4,073.18
$99,416.08



Aug
$99,416.08
$665.30
$85.37
$579.93
$669.29
$4,653.11
$99,330.71



Sep
$99,330.71
$665.30
$85.87
$579.43
$755.16
$5,232.54
$99,244.84



Oct
$99,244.84
$665.30
$86.37
$578.93
$841.53
$5,811.47
$99,158.47



Nov
$99,158.47
$665.30
$86.88
$578.42
$928.41
$6,389.89
$99,071.59



Dec
$99,071.59
$665.30
$87.38
$577.92
$1,015.79
$6,967.81
$98,984.21






Yearly Schedule of Balances and Payments



Year
Beginning Balance
Payment
Principal
Interest
Cumulative Principal
Cumulative Interest
Ending Balance



2009
$98,984.21
$7,983.60
$1,089.63
$6,893.97
$2,105.42
$13,861.78
$97,894.58



2010
$97,894.58
$7,983.60
$1,167.98
$6,815.62
$3,273.40
$20,677.40
$96,726.60



2011
$96,726.60
$7,983.60
$1,252.41
$6,731.19
$4,525.81
$27,408.59
$95,474.19



2012
$95,474.19
$7,983.60
$1,342.95
$6,640.65
$5,868.76
$34,049.24
$94,131.24



2013
$94,131.24
$7,983.60
$1,440.03
$6,543.57
$7,308.80
$40,592.80
$92,691.20



2014
$92,691.20
$7,983.60
$1,544.13
$6,439.47
$8,852.93
$47,032.27
$91,147.07



2015
$91,147.07
$7,983.60
$1,655.76
$6,327.84
$10,508.69
$53,360.11
$89,491.31



2016
$89,491.31
$7,983.60
$1,775.45
$6,208.15
$12,284.14
$59,568.26
$87,715.86



2017
$87,715.86
$7,983.60
$1,903.80
$6,079.80
$14,187.94
$65,648.06
$85,812.06



2018
$85,812.06
$7,983.60
$2,041.43
$5,942.17
$16,229.36
$71,590.24
$83,770.64



2019
$83,770.64
$7,983.60
$2,189.00
$5,794.60
$18,418.37
$77,384.83
$81,581.63



2020
$81,581.63
$7,983.60
$2,347.24
$5,636.36
$20,765.61
$83,021.19
$79,234.39



2021
$79,234.39
$7,983.60
$2,516.93
$5,466.67
$23,282.54
$88,487.86
$76,717.46



2022
$76,717.46
$7,983.60
$2,698.88
$5,284.72
$25,981.41
$93,772.59
$74,018.59



2023
$74,018.59
$7,983.60
$2,893.98
$5,089.62
$28,875.39
$98,862.21
$71,124.61



2024
$71,124.61
$7,983.60
$3,103.18
$4,880.42
$31,978.57
$103,742.63
$68,021.43



2025
$68,021.43
$7,983.60
$3,327.51
$4,656.09
$35,306.08
$108,398.72
$64,693.92



2026
$64,693.92
$7,983.60
$3,568.06
$4,415.54
$38,874.14
$112,814.26
$61,125.86



2027
$61,125.86
$7,983.60
$3,825.99
$4,157.61
$42,700.14
$116,971.86
$57,299.86



2028
$57,299.86
$7,983.60
$4,102.58
$3,881.02
$46,802.71
$120,852.89
$53,197.29



2029
$53,197.29
$7,983.60
$4,399.15
$3,584.45
$51,201.86
$124,437.34
$48,798.14



2030
$48,798.14
$7,983.60
$4,717.17
$3,266.43
$55,919.03
$127,703.77
$44,080.97



2031
$44,080.97
$7,983.60
$5,058.17
$2,925.43
$60,977.20
$130,629.20
$39,022.80



2032
$39,022.80
$7,983.60
$5,423.83
$2,559.77
$66,401.02
$133,188.98
$33,598.98



2033
$33,598.98
$7,983.60
$5,815.91
$2,167.69
$72,216.94
$135,356.66
$27,783.06



2034
$27,783.06
$7,983.60
$6,236.35
$1,747.25
$78,453.29
$137,103.91
$21,546.71



2035
$21,546.71
$7,983.60
$6,687.17
$1,296.43
$85,140.46
$138,400.34
$14,859.54



2036
$14,859.54
$7,983.60
$7,170.59
$813.01
$92,311.05
$139,213.35
$7,688.95



2037
$7,688.95
$7,983.60
$7,688.95
$294.65
$100,000.00
$139,508.00
$0.00






test
This is NOT ROCKET SCIENCE
Each month you make your payment and each month the banker spends the interest portion back into the economy. The running total of all the interest is what the banker spent back into the economy. To me this amortization table clearly illustrates that all the money necessary to pay the loan and the interest is included in the original amount of the loan via the structure of the repayment schedule.

You need to imagine another column called “the monetary economy” and into that column goes your check when you cash it for the cabin/boat/x that you have already signed a mortgage against and is held by the bankster.



cash check and our “economy” has $100,000.00.
make first monthly payment of $665.30 and our economy has $99,334.70
Bankster takes his cut first and spends money into “economy” which now has $99,918.03 (its magic it exactly matches the balance that you owe).
make 2nd monthly payment of $665.30 and our economy has $99,252.73
bankster takes his cut first and spends money into “economy” which now has $99,252.73 PLUS $582.86 EQUALS $99,835.59 (more magic it matches your balance again)
make 3rd monthly payment of $665.30 and our economy has $99,170.29
Bankster takes his cut first and spends money into “economy” which now has $99,170.29 + $582.37 = $99,752.66 (Damn I’m beginning to see a pattern here… Question really is, how many more iterations of this illustration are necessary?). It only takes 3 to establish a pattern.
And as we proceed through all 360 payments the money in our “economy” exactly mirrors the unpaid balance of your loan and all along the way the primary FRN’s that were used as reserves are being freed up to add to our “economy”. The Bankster needs to keep a 3% reserve of primary money (FRN’s) to match your loan balance.














Test

[Bigjon]

I subscribe to the principle called Occams Razor. The simplest solution is the best. If you can distill an idea down to its simplest explanation, you have optimized knowldege. I'm not eloquent about it, so give Wikipedia a go on that one. Anyway, I see the banker's lending out money as principal only, and obliging the borrower to repay that principal plus interest. This works all well and fine as you say, so long as people are willing to borrow money, and the bankers are willing to lend it to them. What happens if people stop borrowing money? Loans will be repaid, the principal extinguished, and the money supply will shrink. And it will keep shrinking as long as people are not borrowing new money. Interest mostly has the function of transferring wealth (in the form of money) into the pockets of the bankers. It's secondary function is to regulate new borrowing. The bankers can also restrict the money supply by not lending if the demand exists. They do this by raising interest rates until demand drops. The supply of money however is determined by actual borrowing of money (new loans). The bankers don't create any actual money to cover the need people have to make their interest payments. People have to work to earn that money, and the value of their labor is thus transferred to the bankers using whatever money supply is available.

Banking is racketeering on a grand scale.


Hatha

Most of what you say is true, but I see you still don't "get it".

There don’t have to be more loans to get the money to pay the interest.

First we have a two tier money system, the Fed issues primary money in the form of FRN's and banks expand that primary money through fractional reserve lending, with the current multiplier max at about 33 times the primary supply.

Each and every loan is an expansion of the money supply in the form of an entry into a bank ledger, just a number in an account, but used as money just as well as FRN's. It's true that as lending goes down the money supply goes down, that is the big picture and complicates understanding what happens when looking at how a loan is paid off.

Just look at one loan, which is the worst case example of liquidity. More loans equal more available money to be earned and used to make loan payments.

The first loan number one starts off expanding the primary money into a number in the ledger. Say 100,000.00.

[Hatha Sunahara]

You have to go a step further in your analysis. You have to make a distinction between money and wealth. You are not making that distinction. You are only looking at the money.

Interest payments are a transfer of wealth. If you make the interest payment, and you work for a living, you are transferring the value of your work to the banker. The value of your work is your wealth. When you get paid for it, this wealth exists as money. You could spend that money yourself. But no, you give it to the banker because he wants 'rent' for the money you borrowed from him. There will always be enough money in the money supply to effect this transfer. If you don't have the cash to make the interest payment, you'll go to a Payday Loan shark to get it, and borrow new money. And if your boss doesn't have enough cash to make his payroll, he'll sell commercial paper (borrow money) to pay you for your work.

But the banker never creates the money paid as interest. That is a wealth transaction that uses the existing money supply to make the transfer. Once the banker gets his profit, he buys a different asset, and the value is no longer held as money. Your work = his yacht. You are correct, enough money is created to insure that the wealth represented by the interest payment is transferred to the banker. It is simply one of the uses of the money that was created--all of which is 'loaned out principal', It's your job as a slave to deliver that value to the banker using his money system to convert your labor into wealth the banker can own and use. You would achieve the same thing if you worked for the banker part time for free, but no money would be involved to pay the interest.

And you're right it's not rocket surgery.

Hatha

[TheNocturnalEgyptian]

There don’t have to be more loans to get the money to pay the interest.

So is it true that the system requires roughly exponential growth forever to stay solvent?


Broad question, I know.

[TheNocturnalEgyptian]

Does anybody else do this? I spend time imagining what things would be like if the inherant benefit from the creation of money were used to pay down taxes, to reduce the burden on the public. Provide services, like everyone seems to want. There are trillions concealed in the power to coin money, nay more! All this could be used to construct a beneficial, healthy, sound society. One that is not in constant danger of collapse. More freedom, less debt, will allow surplus to be built.

I day dream of that.

[Horn]

So is it true that the system requires roughly exponential growth forever to stay solvent?


Broad question, I know.

Yes, there is a huge sucking sound from the top when 3% growth per anum is left unfulfilled.


http://www.youtube.com/watch?v=Hk1RQTWSWto

Though thru modern day electronics you can just reset it on "increased penalty error taxation" for early withdrawl.

[Hatha Sunahara]

Does anybody else do this? I spend time imagining what things would be like if the inherant benefit from the creation of money were used to pay down taxes, to reduce the burden on the public. Provide services, like everyone seems to want. There are trillions concealed in the power to coin money, nay more! All this could be used to construct a beneficial, healthy, sound society. One that is not in constant danger of collapse. More freedom, less debt, will allow surplus to be built.

I day dream of that.


I had those kind of daydreams for a very long time. Now what I daydream about is people waking up to how they are being used by the Money Power.

Hatha

[Glass]

What happens when a loan is interest only?

[Horn]

When I think of the future,

I think about aged nuclear plants being pushed beyond their maintenance life schedules

[Hatha Sunahara]

What happens when a loan is interest only?

Then you have to keep borrowing principal to pay back the interest, and the debt will grow exponentially. This is the US Government's debt situation.


Hatha

[Bigjon]

So is it true that the system requires roughly exponential growth forever to stay solvent?


Broad question, I know.

No, there doesn't have to be exponential growth. When there is exponential growth it could be from a good cause like exponential productivity growth. However if it just an exponential growth in the money supply, without a matching productivity gain we get inflation.

The model that the Fed is using is to create inflation, which steals value from our money and cheats us while paying them. They could run this system and keep it in balance with productivity, but it is much easier to steal through inflation.

[Bigjon]

You have to go a step further in your analysis. You have to make a distinction between money and wealth. You are not making that distinction. You are only looking at the money.

Interest payments are a transfer of wealth. If you make the interest payment, and you work for a living, you are transferring the value of your work to the banker. The value of your work is your wealth. When you get paid for it, this wealth exists as money. You could spend that money yourself. But no, you give it to the banker because he wants 'rent' for the money you borrowed from him. There will always be enough money in the money supply to effect this transfer. If you don't have the cash to make the interest payment, you'll go to a Payday Loan shark to get it, and borrow new money. And if your boss doesn't have enough cash to make his payroll, he'll sell commercial paper (borrow money) to pay you for your work.

But the banker never creates the money paid as interest. That is a wealth transaction that uses the existing money supply to make the transfer. Once the banker gets his profit, he buys a different asset, and the value is no longer held as money. Your work = his yacht. You are correct, enough money is created to insure that the wealth represented by the interest payment is transferred to the banker. It is simply one of the uses of the money that was created--all of which is 'loaned out principal', It's your job as a slave to deliver that value to the banker using his money system to convert your labor into wealth the banker can own and use. You would achieve the same thing if you worked for the banker part time for free, but no money would be involved to pay the interest.

And you're right it's not rocket surgery.

Hatha

Your analysis here is spot on, it is a slave system. The amount of interest banks charge is exorbitant for what they do, but we have been trained by our schools that debt is good, buy now and pay later.

Well on second reading I see you haven't even looked at what I posted, when the banker spends the interest it is back in the economy. You will never "get it", because questioning your belief system is something you are incapable of doing.

Money is a thing and spending moves that thing from one hand to another. Spending is an action that moves money from one place to another. The only place where money can be extinguished is at the bank, so once the banker moves it to the economy by spending it you can earn it again (SAME MONEY RECYCLED) over and over month after month.

[Bigjon]

What happens when a loan is interest only?

You are a permanent slave of the banker. You deliver your payment and he spends the interest, forever. Hatha will never "get it", because he refuses to look or question his belief.

[Bigjon]

Then you have to keep borrowing principal to pay back the interest, and the debt will grow exponentially. This is the US Government's debt situation.
Hatha

The debt grows exponentially because the Fed never retires any bonds by rolling the debt from one bond to a newer issued bond. If the fed retired those bonds they could stabilize our money system and introduce deflation, but they are getting wealthy through stealing by inflation.

[palani]

they are getting wealthy through stealing by inflation.

Illusion. Nobody gets wealthy by dealing in other peoples IOU's.

And still, no one has answered my question ... "What is the definition of a dollar?"

[Bigjon]

Illusion. Nobody gets wealthy by dealing in other peoples IOU's.

And still, no one has answered my question ... "What is the definition of a dollar?"

That big house on the hill is an illusion, I think you are an illusion.

The dollar is 371.25 grains of fine silver or long answer (http://www.fame.org/HTM/Vieira_Edwin_What_is_a_Dollar_EV-002.HTM).

[palani]

That big house on the hill is an illusion It certainly is .. don't pay the tax and see how it evaporates.


I think you are an illusion. You think?



The dollar is 371.25 grains of fine silver or... If one dollar is 371.25 grains of silver then ten dollars is 3,712.5 grains or around 8.5 ounces. But silver is bought for $28.68 per ounce so 3,712.5 grains would convert to
$243.78. $243.78 by your definition would be 90,503 grains of fine silver which would be 243.78 ounces.

Does your bag contain unequal weights and measures?

[7th trump]

One dollar is what ever the delusional David merrill Van Pelt says it is or wants it to be.
Dont beleive me just ask Palani...they are buddies!

[Hatha Sunahara]

Your analysis here is spot on, it is a slave system. The amount of interest banks charge is exorbitant for what they do, but we have been trained by our schools that debt is good, buy now and pay later.

Well on second reading I see you haven't even looked at what I posted, when the banker spends the interest it is back in the economy. You will never "get it", because questioning your belief system is something you are incapable of doing.

Money is a thing and spending moves that thing from one hand to another. Spending is an action that moves money from one place to another. The only place where money can be extinguished is at the bank, so once the banker moves it to the economy by spending it you can earn it again (SAME MONEY RECYCLED) over and over month after month.

I looked at what you posted, and thought about it carefully. I just don't believe that the banker 'spends' the interest. The banker 'reinvests' the interest in a way that multiplies its return by the 'multiplier' (the inverse of the reserve requirement). We are in agreement on everything but how the argument is presented. I understand your point--the system sustains the transfer of wealth to the banker without requiring anyone to borrow money specifically to pay interest. The interest transaction uses the feature of money that we call 'a medium of exchange'. If you agree that what the banker extracts as interest is the value of our labor, then we have no disagreement whatsoever.

Hatha

[Bigjon]

I looked at what you posted, and thought about it carefully. I just don't believe that the banker 'spends' the interest. The banker 'reinvests' the interest in a way that multiplies its return by the 'multiplier' (the inverse of the reserve requirement). We are in agreement on everything but how the argument is presented. I understand your point--the system sustains the transfer of wealth to the banker without requiring anyone to borrow money specifically to pay interest. The interest transaction uses the feature of money that we call 'a medium of exchange'. If you agree that what the banker extracts as interest is the value of our labor, then we have no disagreement whatsoever.

Hatha

You have to impose special conditions on the banker to make your viewpoint true.

Even if what you say were true, the banker is still spending the interest procured money, by making it available for use. In order to multiply the money he needs to make a loan. The system of expanded money only works by transforming physical FRN's to ephemeral illusory numbers in a ledger. Whereby the transfer and use of exchanging numbers in bank accounts looks and feels like the real thing of passing physical currency.

I only agree with the view that debt is slavery.

[Horn]

No, there doesn't have to be exponential growth. When there is exponential growth it could be from a good cause like exponential productivity growth. However if it just an exponential growth in the money supply, without a matching productivity gain we get inflation.

The model that the Fed is using is to create inflation, which steals value from our money and cheats us while paying them. They could run this system and keep it in balance with productivity, but it is much easier to steal through inflation.

Inflation is growth, when they can't achieve it, they change the system.

[Hatha Sunahara]

Originally posted by Bigjon

Even if what you say were true, the banker is still spending the interest procured money, by making it available for use.

It seems that the only point of disagreement here is about the word 'spending'. I make a distinction between spending and investing. Spending to me means consuming the value. Investing, to me, means buying assets (loans) which provide a return. Bankers reinvest most of their interest income. I would agree however that they might spend a relatively minor part of their profits on things like parties to celebrate their 'success'. Or status symbols.

Hatha

[Bigjon]

It seems that the only point of disagreement here is about the word 'spending'. I make a distinction between spending and investing. Spending to me means consuming the value. Investing, to me, means buying assets (loans) which provide a return. Bankers reinvest most of their interest income. I would agree however that they might spend a relatively minor part of their profits on things like parties to celebrate their 'success'. Or status symbols.


Hatha


It still doesn't matter how you slice and dice it, you are making the money from the interest payments available to the economy. Which means someone can earn from that pool of money and no further borrowing is necessary to pay the interest of any given loan.

I've never been able to invest without spending money, but you've learned a way to do that? You should get a patent on that.


If things worked like you think, interest would cause deflation.

[Bigjon]

Inflation is growth, when they can't achieve it, they change the system.

Inflation is theft, not growth.

[palani]

One dollar is what ever the delusional David merrill Van Pelt says it is or wants it to be.
Dont beleive me just ask Palani...they are buddies!

Do YOU have unequal weights and measures in YOUR bag?

Do YOU have a more firm grasp on reality than others or is YOUR garden infested with weeds?

Are YOU at Plow and Planter or Harvester?

[Mouse]

Do YOU have unequal weights and measures in YOUR bag?

Do YOU have a more firm grasp on reality than others or is YOUR garden infested with weeds?

Are YOU at Plow and Planter or Harvester?

Which Bag? This one has 5,000 dimes, this one here has 2,000 quarters, that one over there has 500 half-dollars. Which bag?

Which garden?

Plow, plant AND harvest. It's tough work.

[Hatha Sunahara]

I've never been able to invest without spending money, but you've learned a way to do that? You should get a patent on that.


Have you ever loaned anybody money? Do you consider that 'spending' the money, or 'investing' it?

Do you know what a Balance Sheet is? How about an Income Statement? Do you know the difference between the two?

Hatha

[palani]

Which Bag? This one has 5,000 dimes, this one here has 2,000 quarters, that one over there has 500 half-dollars. Which bag? Wrong questions. More appropriate: "What is a dollar?" If there is not a dollar then how can there be dimes, quarters or half-dollars?


Which garden? Here is a reading opportunity: http://www.gutenberg.org/ebooks/4507


Plow, plant AND harvest. It's tough work. Perhaps not so hard if you have a Deere?

[palani]

Have you ever loaned anybody money? Do you consider that 'spending' the money, or 'investing' it?

Do you know what a Balance Sheet is? How about an Income Statement? Do you know the difference between the two?

Hatha

Nice questions. I recognize the style.

[Horn]

Inflation is theft, not growth.

You are inflating your opinion of inflation, bigjon.

The more economic growth you have the more it will release whatever the monetary unit is to trade with,

in turn more on the streets and not in the pocket = inflation.

With or without bank interest.

Is why gold always has such a hard go at it, once inflated nobody wants to turn back to the old number for it stunts growth.

Not saying good or bad, just is.

[Bigjon]

Have you ever loaned anybody money? Do you consider that 'spending' the money, or 'investing' it?

Do you know what a Balance Sheet is? How about an Income Statement? Do you know the difference between the two?

Hatha

Of course, but I'm not a banker, you are playing the part of a banker and you are moving the money called interest to where it is available to the public. You bought something, but claim you didn't spend it, nice trick, I wonder how?

Why don't you tell me how, instead of playing 20 questions?

I believe the banker spends the interest, because it keeps the system working. Why kill the golden goose?

If he lends the interest he is also spending the interest and making the interest money available to the public. I think he would be a fool not to spend the interest, because he can get the customer to pay up the money to take out a new loan. There is only big money in expanding money and the only way he can expand money is by making loans.

[Bigjon]

You are inflating your opinion of inflation, bigjon.

The more economic growth you have the more it will release whatever the monetary unit is to trade with,

in turn more on the streets and not in the pocket = inflation.

With or without bank interest.

Is why gold always has such a hard go at it, once inflated nobody wants to turn back to the old number for it stunts growth.

Not saying good or bad, just is.

Economic growth implies I can buy more with the same dollar. Inflation implies it takes more dollars to buy xxx.
Beyond that I have no idea of what you are trying to say.

[Horn]

Economic growth implies I can buy more with the same dollar.

That's financial growth, not economic growth.

Economic growth will not only imply you get less with your dollar, but demand it thru support.

[palani]

Economic growth implies I can buy more with the same dollar.

A while back (when I was still engaged in commerce) I took a job that required I travel 150 miles one way. At the time, if I got hungry 30 miles away in a town where there was a Hardy's hamburger stand, I could buy a bagel and cream cheese for $.59. If I didn't get hungry till later 90 miles from home was a Hardy's hamburger stand where I could buy a bagel and cream cheese for $1.09. Sometimes however I would get hungry right before I got to the town where the work was and could purchase a bagel and cream cheese at a Hardy's there for $1.59.



What is a dollar worth?

[osoab]

What is a dollar worth?

What ever the market tolerates.

[ximmy]

What ever the market tolerates.

http://www.marcondo.com/marcondo/guitar/wool.jpg

[palani]

What ever the market tolerates.

That would be the black market? This market is after all the only free market in existence free from government price controls but influenced by government statute and shortages derived therefrom.

[osoab]

That would be the black market? This market is after all the only free market in existence free from government price controls but influenced by government statute and shortages derived therefrom.


Did you as a market maker, you buying the bagels, ever haggle the price? Either way what ever you paid is what you tolerated.

I'm not talking macro market, just micro market scenario.

[palani]

Did you as a market maker, you buying the bagels, ever haggle the price?

No. In my experience cashiers are authorized to do two things: take the money or call the policymen. They have no latitude to negotiate.

Merchants have a feel for the money available in their neighborhood. I was going from a somewhat depressed area to one where craftsmen could make over $100,000. The merchants do their sensitivity studies all the time. They know what they can sell an item for or, if it sits on the shelf for a while, they know their price is too high.


The point is there is no uniformity in the value of a dollar. The price is established by the availability rather than the unit measure.

[Hatha Sunahara]

A dollar is worth more today than it will be worth tomorrow.


Hatha

[palani]

A dollar is worth more today than it will be worth tomorrow.


Hatha


Considering the concept of revolution and it's circular implications I wouldn't expect the value of a dollar to vanish to zero. As it approaches a black hole it will slingshot around the horizon and return to reality.


A dollar is the value of one man's work for a day. There .. now you have a workable definition.

[Bigjon]

That's financial growth, not economic growth.

Economic growth will not only imply you get less with your dollar, but demand it thru support.

Your dictionary is busted.

economic growth
Definition
A positive change in the level of production of goods and services by a country over a certain period of time. Nominal growth is defined as economic growth including inflation, while real growth is nominal growth minus inflation. Economic growth is usually brought about by technological innovation and positive external forces.

Definition of 'Economic Growth'
An increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be measured in nominal terms, which include inflation, or in real terms, which are adjusted for inflation. For comparing one country's economic growth to another, GDP or GNP per capita should be used as these take into account population differences between countries.

Investopedia explains 'Economic Growth'
Economic growth is usually associated with technological changes. An example is the large growth in the U.S. economy during the introduction of the Internet and the technology that it brought to U.S. industry as a whole. The growth of an economy is thought of not only as an increase in productive capacity but also as an improvement in the quality of life to the people of that economy.

I can't find anyone who defines "Financial Growth".

[Bigjon]

No. In my experience cashiers are authorized to do two things: take the money or call the policymen. They have no latitude to negotiate.

Merchants have a feel for the money available in their neighborhood. I was going from a somewhat depressed area to one where craftsmen could make over $100,000. The merchants do their sensitivity studies all the time. They know what they can sell an item for or, if it sits on the shelf for a while, they know their price is too high.


The point is there is no uniformity in the value of a dollar. The price is established by the availability rather than the unit measure.

What you say may or may not be true, because you don't know or state the relative costs associated with doing business in each area. In a financially depressed area land costs, maintenance costs and labor costs will be lower and the guy with the cheap price may be making more money than the high priced guy.

[palani]

you don't know or state the relative costs associated with doing business in each area..
Irrelevant. The merchant is going to insure he makes a profit. If he doesn't he isn't going to be around long. I wouldn't advocate judging the economics of a given area by a single store with a huge banner stating 'GOING OUT OF BUSINESS. EVERYTHING 75% OFF". If you have 20 such stores in a neighborhood you might want to reconsider new business ventures in the area.

[Bigjon]

Irrelevant. The merchant is going to insure he makes a profit. If he doesn't he isn't going to be around long. I wouldn't advocate judging the economics of a given area by a single store with a huge banner stating 'GOING OUT OF BUSINESS. EVERYTHING 75% OFF". If you have 20 such stores in a neighborhood you might want to reconsider new business ventures in the area.

Profit is the only relevant thing in this, but you are always out in lala land.

[palani]

Profit is the only relevant thing in this, but you are always out in lala land.

Commercial people take profit. If by lala land you mean the land of the living then you would be correct. Your ability to reason is limited by your inability to escape commerce.

[Bigjon]

Commercial people take profit. If by lala land you mean the land of the living then you would be correct. Your ability to reason is limited by your inability to escape commerce.

You state that the dollar has no relative value and ignore the cost factor and call it irrelevant, which only adds up to one thing your ability to use reason doesn't exist.

[Horn]

I can't find anyone who defines "Financial Growth".

It may not be defined, but its what you seek when looking for 1 dollar to equal 2.


Economic growth implies I can buy more with the same dollar.

Inflation is growth.

[Bigjon]

It may not be defined, but its what you seek when looking for 1 dollar to equal 2.



Inflation is growth.

Inflation is growth of the money supply in reference to the productivity.

Like I said u are using u'r own dicshinary and not 1 any 1 butt u can stand undr.

[Horn]

Inflation is growth of the money supply in reference to the productivity.

Well at least it isn't defined as theft anymore...


http://www.youtube.com/watch?v=QIauEsaFjIc

and quit being so serial :)

[Mouse]

Palani,

Enjoyed that read and timely as well. Cheers.

I live in a small town and I have lived in the big town. A sammich is cheaper in the small town. Supply and demand, there's only so many chits to go around and the banker gets his tithe on every one in both large and small towns.

A dollar is worth what two or more people under no duress agree it is worth in an arms-length transaction. A dollar is worth more or less depending on where and with whom you are trading.

A dollar really doesn't exist anymore, except for those people who would say, based on some artificial spot price, it is worth about $21 FRN.

An FRN is worth what two or more people under no duress agree it is worth in an arms-length transaction. If you ever find those people, please let me know.

M

[D sciple]

Of course, but I'm not a banker, you are playing the part of a banker and you are moving the money called interest to where it is available to the public. You bought something, but claim you didn't spend it, nice trick, I wonder how?

Why don't you tell me how, instead of playing 20 questions?

I believe the banker spends the interest, because it keeps the system working. Why kill the golden goose?

If he lends the interest he is also spending the interest and making the interest money available to the public. I think he would be a fool not to spend the interest, because he can get the customer to pay up the money to take out a new loan. There is only big money in expanding money and the only way he can expand money is by making loans.

Wasn't there deflation in the Great Depression? Like...a shortage of currency? So people couldn't do commerce, they gotta sell whatev, to pay for whatev, bada bing (:)) there goes my farm into a Jews hands?

So my thinking is a little fuzzy on this, but T.H.E.Y. give out mad loans, everyones ballin' and buying shit left and right thinking the future looks great, then they contract the money supply (just hold it? don't give out loans), no one has cash, but they have a lot of loans to pay, prices go down and T.H.EY. snatch up all the real assets (at a low price)? Rinse and repeat?

So that's why the interest is just icing on the cake and kind of a red herring?

Perhaps this time around, they pretty much got it all, and they're going for blatant, in your face goy, slavery?

[TheNocturnalEgyptian]

Even if the money were gold and silver, sandwiches would still cost different amounts in different towns, I expect.



And yes the money supply is breathing (expand, contract) and each ripple confiscates some real goods. Even though most people CAN pay the interest, the system is always harvesting someone. Overtime more and more real goods are funneled upwards. This creates an ownership of large swaths of society (%'s in corporations, etc) which the law views as completely legal.

http://i.imgur.com/w8aAS.png

[Bigjon]

Well at least it isn't defined as theft anymore...


http://www.youtube.com/watch?v=QIauEsaFjIc

and quit being so serial :)

Oh, that's so nice you're playing my song.

You're also putting words in my mouth that I never said, inflation is still theft.

Do you have any savings? I do and every year they debase the currency through inflation it is like someone reaching into my savings account and stealing 4, 5, maybe as high as 10 percent.

Counting is serial business.

[Bigjon]

Wasn't there deflation in the Great Depression? Like...a shortage of currency? So people couldn't do commerce, they gotta sell whatev, to pay for whatev, bada bing (:)) there goes my farm into a Jews hands?

So my thinking is a little fuzzy on this, but T.H.E.Y. give out mad loans, everyones ballin' and buying shit left and right thinking the future looks great, then they contract the money supply (just hold it? don't give out loans), no one has cash, but they have a lot of loans to pay, prices go down and T.H.EY. snatch up all the real assets (at a low price)? Rinse and repeat?

So that's why the interest is just icing on the cake and kind of a red herring?

Perhaps this time around, they pretty much got it all, and they're going for blatant, in your face goy, slavery?


During the Great depression the bankers called in their loans (they could do that, those days) and reduced the money supply by one third and caused many small banks to fail wiping out the savings of most of the middle class.

As far as interest is concerned I think money should be issued by the treasury like Bill Still proposes, but believe that interest should still be allowed to pay private hands to make excess money available.

There was an article about the English setting up a private banking system and they would use fractional reserve lending on a ten to one basis, but would only charge a one time ten percent fee for any loan. I don't know quite how that would work, but sounds good to me.

[palani]

You state that the dollar has no relative value We are now talking of the value of a day of a man's labor right? Whatever he trades his labor (8 hours of it) for is a dollar. That might be pumpkins or tobacco leaves. But he trades his labor for $20 in FRNs and then some agency comes in later and demands an internal revenue tax of $5 on his use of this paper instrument then he is left with $15 which is only 75% of what he agreed his dollar's worth of labor was valued at.

I don't object to a FRN having value. I object to it's value not being CONSTANT.


and ignore the cost factor and call it irrelevant You have a car for sale. You value it at $20,000 because that is what you paid for it when it was new. I call irrelevant YOUR cost because it has no meaning in the present time. The same is true with a merchant who bought wholesale an item just one day before.



which only adds up to one thing your ability to use reason doesn't exist.

Then that would only leave me with the usufruct of REASON wouldn't it?

[palani]

Palani,

An FRN is worth what two or more people under no duress agree it is worth in an arms-length transaction. If you ever find those people, please let me know.

M

Two people can certainly come to a conclusion on their concept of the value of a negotiable paper instrument called a $1 FRN. However, that $1 FRN comes with liabilities established by Congress under title 26 and those liabilities (aka the requirement to account to the federal government for the incidental handling of the "note" ) make the value worthless in the end analysis.

A rule of law is that you may only extinguish a debt with something you OWN. You never have and never will OWN a single FRN.

[Bigjon]

We are now talking of the value of a day of a man's labor right? Whatever he trades his labor (8 hours of it) for is a dollar. That might be pumpkins or tobacco leaves. But he trades his labor for $20 in FRNs and then some agency comes in later and demands an internal revenue tax of $5 on his use of this paper instrument then he is left with $15 which is only 75% of what he agreed his dollar's worth of labor was valued at.

I don't object to a FRN having value. I object to it's value not being CONSTANT.

You have a car for sale. You value it at $20,000 because that is what you paid for it when it was new. I call irrelevant YOUR cost because it has no meaning in the present time. The same is true with a merchant who bought wholesale an item just one day before.




Then that would only leave me with the usufruct of REASON wouldn't it?

You can't assess relative value without considering cost.

[Bigjon]

A while back (when I was still engaged in commerce) I took a job that required I travel 150 miles one way. At the time, if I got hungry 30 miles away in a town where there was a Hardy's hamburger stand, I could buy a bagel and cream cheese for $.59. If I didn't get hungry till later 90 miles from home was a Hardy's hamburger stand where I could buy a bagel and cream cheese for $1.09. Sometimes however I would get hungry right before I got to the town where the work was and could purchase a bagel and cream cheese at a Hardy's there for $1.59.



What is a dollar worth?


You can't assess the value of a dollar without considering the costs borne by these places.

The profit may all be the same after considering the cost.

[palani]

You can't asses relative value without considering cost.

Why not? Pawn shops don't consider cost when they assess value to YOUR goods do they? You got something that costs you a grand and yet will only be offered two hundred.

You appear to have a theory that doesn't hold water.

[palani]

You can't asses the value of a dollar without considering the costs borne by these places.

Am I laboring under a servitude that is not born by others? Please elucidate.

[Horn]

Oh, that's so nice you're playing my song.

You're also putting words in my mouth that I never said, inflation is still theft.

Inflation is not theft, it is demanded by a growing economy. In fact you can't grow without it.

The issue today is the FED has total control over the mass aggregate of cash (with electronic transfer & imaginary hedge fund digits) they can add and subtract at will. Its not inflation, its nothing but systemic corruption. (monetary debasement)

Monetary debasement is theft, and what the FED does when it buys it own bonds, or pumps the market, that is theft. And a myriad of other FED actions including toying with the interest rate.

Though some say it is better than going to war which I mentioned before. I guess the thought process is there that, if you don't give them a foot, they will take a mile and include your life... in the end it is the same just a slow agonizing death...

And I would never put words in bigjon's mouth.

http://en.wikipedia.org/wiki/Debasement

[D sciple]

Currency inflation (amount of cash in circulation increases) is not the same as price inflation (prices go up, not cool) fwiw, where applicable.

[Golden]

"Banks pretend to be solvent and consumers pretend to have money."

[Hatha Sunahara]

And everybody pretends to work and all the employers pretend they are paying them.

Our government pretends they represent us, and we pretend they are legitimate.

The emperor really does have new clothes.


Hatha

[Rubberchicken]

Asset price deflation with consumer price inflation is what's going on. We don't want inflation and we don't want deflation. What we want is flation.

[Horn]

Asset price deflation with consumer price inflation is what's going on. We don't want inflation and we don't want deflation. What we want is flation.

Now you're putting words in the Dictionary.

Was this in the runup to the thousand points of light speech?

[Rubberchicken]

Now you're putting words in the Dictionary.



It's been said once but I'll repeat for you Horatio Beanblower- DO NOT Question Authority!

[palani]

DO NOT Question Authority!

You must have a THEORY because this attitude is a loser

Every One Is Author

And because the Multitude naturally is not One, but Many; they cannot be understood for one; but many Authors, of every thing their Representative faith, or doth in their name; Every man giving their common Representer, Authority from himselfe in particular; and owning all the actions the Representer doth, in case they give him Authority without stint: Otherwise, when they limit him in what, and how farre he shall represent them, none of them owneth more, than they gave him commission to Act.

[Hatha Sunahara]

A rule of law is that you may only extinguish a debt with something you OWN. You never have and never will OWN a single FRN.

I have a nice one here with a picture of George Washington. It's in my possession. Doesn't that account for 90+% of ownership? According to the law. Who does the law deem to be the owner? I seem to remember paying these things for my mortgage. Did I extinguish that debt? Or did I just 'settle' it? If FRNs have no value, and you can't own them, why do we use them for money? Are we the victims of a gigantic fraud?


Hatha

[Horn]

It's been said once but I'll repeat for you Horatio Beanblower- DO NOT Question Authority!

Just remember, the bulk of your thanks is in large part given from me, sire.

Now for the "beanblower" part... a role, I think You may find much more suitable.

As having them all in your pocket.

[palani]

I have a nice one here with a picture of George Washington. It's in my possession. Doesn't that account for 90+% of ownership? 12 USC 411 ... you hold it as an agent or a bank .. those are the only two choices. YOU ARE NOT A PRINCIPAL IN EITHER CASE.

Who does the law deem to be the owner? You own what you sign. The signature is owned by the Treasurer of the United States and his secretary. (How many people do you know who need their SECRETARY to co-sign?) However they both are signing in their official capacity with respect to the United States so it is THEIR principal that they are representing.

I seem to remember paying these things for my mortgage. Did I extinguish that debt? Or did I just 'settle' it? In law debts are discharged. These notes are used to extinguish debt. The debt is still there though.

If FRNs have no value, and you can't own them, why do we use them for money? Are we the victims of a gigantic fraud? What you use for money establishes your lawform. Don't bother to look up that word because it is conveniently lacking from every law dictionary I have found. Use of financial instruments like notes, IOUs, bonds, etc put you out to sea. You will not have access to law. Instead equity is what is used against you.

[JDRock]

re: where has all the $ gone? You might want to start with leo wanta ;)