Quote Originally Posted by Joe King View Post
What just happened was that the Bank allowed the person seeking the loan to access their future earnings, today.

When enough people do that, it expands the money supply to allow exponentially more economic activity than would otherwise be able to occur without it.

Here's an example I've used.

Ever seen Wimpy in the Popeye cartoon? Why won't the guy let Wimpy pay tomorrow for a hamburger today?
Because he doesn't know if Wimpy is worth it or not. So along comes the banker who the guy knows is good for it as he has a vault full of "money". Surely he can be trusted to pay tomorrow for a hamburger today.

So the banker extends some oh his credit to Wimpy for a price {interest} and Wimpy gets to eat today instead of waiting 'til after he's possibly earned some "money" at some point in the future.
...and because sales are up, the guy selling hamburgers can then spend the newly created private bank credit on more hamburger meat.

Also, now that there is more "money" available in the market place, it will be easier for Wimpy to be able to earn that "money" back so that he may be able to re-pay the banker for having extended him credit yesterday.

Possibly by delivering hamburger meat, because due to people spending private bank credit as "money", they sold a lot more hamburgers than they otherwise would have. So now there's a new job opening at the butcher shop to deliver hamburger meat that wouldn't have otherwise existed.

Now, times that by 300,000,000 people all using the next several decades worth of "future money" today, and we end up with all this stuff you see that's still all owed for.
Everything from the roads you drive on to the houses we sit in to the buildings we work in. {or outside of, as the case may sometiimes be}

So ultimately the loan is just as fictitious or not as your potential future earning ability is, or is not.

The big problem with a system like this is that it doesn't work so good in reverse.
And it goes into reverse when the collective future earning potential falls too much to support the borrowing of the past. Thats when it starts to sputter and die. Which exibits itself in things like lost jobs.
Thank you special agent. Considering that the your employer is beholden to the bankers, I would surmise that you have a very uniqure perspective on the system.

dys