Cyclone Posted February 9, 2012 Share Posted February 9, 2012 No you don't. Your (and my) taxes pay off the National Debt, and we each currently owe about 30 grand That isn't a personal debt, and for all you know he has sufficient in the bank to pay his bit back should he need to. Link to comment Share on other sites More sharing options...
Cyclone Posted February 9, 2012 Share Posted February 9, 2012 Compound interest is surely the crux of the problem. Now I only scraped a C in GCSE maths but it makes sense to me that if every pound loaned into existence (which is basically what makes up 95% of currency in circulation) carries with it interest, and only the principal is created, then it stands to reason we will need to borrow more interest-laden money in order to cover the interest repayment. Of course, this loan further compounds the interest we were trying to repay from the original loan. Not one person has been able to explain to me how such a system can possibly be self-cancelling and therefore sustainable. Mervyn "no ****" King was right - "of all the many ways of organising banking, the worst is the one we have today". Why would you need to borrow more to repay your original debt? You use the original debt (if you're a company) to grow your business, profit repays the original debt, you don't borrow more and there is no problem with compound interest since you are paying down the debt. Link to comment Share on other sites More sharing options...
Cyclone Posted February 9, 2012 Share Posted February 9, 2012 Should loans be free? The trust and management is what you are paying interest for. Surely the risk and to make it worthwhile for the lender are what you pay interest for? Why lend if it doesn't create a benefit to the lender? Link to comment Share on other sites More sharing options...
epiphany Posted February 9, 2012 Share Posted February 9, 2012 All suggestions welcome Your IED source and the Positive Banking campaign offer comprehensive alternatives. In a nutshell - more public stakeholdership and social control in banking through the legal requirement of democratic charters. Bankers would still earn generous pay for sound investments based on adherence to those charters. All interest would be returned to a mutual public trust (rather than siphoned off into some tax haven) or credit union and reinvested in public services to ensure it's put back into the real economy. Link to comment Share on other sites More sharing options...
Cyclone Posted February 9, 2012 Share Posted February 9, 2012 Banks can't create money from nothing? What about quantative easing? Soon to be over £100 billion. Don't confuse commercial banks with the bank of england, they're very different things. Link to comment Share on other sites More sharing options...
epiphany Posted February 9, 2012 Share Posted February 9, 2012 Why would you need to borrow more to repay your original debt? You use the original debt (if you're a company) to grow your business, profit repays the original debt, you don't borrow more and there is no problem with compound interest since you are paying down the debt. I'm talking society-wide. The collective debt of the economy and how more money must be continually loaned in order to cover the principal + interest. Link to comment Share on other sites More sharing options...
Cyclone Posted February 9, 2012 Share Posted February 9, 2012 Oh that's easy. Everyone defaults on their debt and we start again. No, it's easier than that. Companies make profit, individuals are paid for work. They use this profit or pay to pay down their debts. Fractional reserve banking allows a certain amount of money to be invented (the M3 money supply isn't it?), it's effectively a loan against future profit or earning, that's where the money 'really' comes from, borrowed from your future. Link to comment Share on other sites More sharing options...
Longcol Posted February 9, 2012 Share Posted February 9, 2012 Your IED source and the Positive Banking campaign offer comprehensive alternatives. In a nutshell - more public stakeholdership and social control in banking through the legal requirement of democratic charters. Bankers would still earn generous pay for sound investments based on adherence to those charters. All interest would be returned to a mutual public trust (rather than siphoned off into some tax haven) or credit union and reinvested in public services to ensure its put back into the real economy. I think that is confusing the role of private and central banking. Interest earned by a private bank is used to pay for staff, goods, services etc. Investing in public services is a role for central government from taxation etc. Link to comment Share on other sites More sharing options...
chem1st Posted February 9, 2012 Author Share Posted February 9, 2012 Maybe everyone who cares already knows how fractional reserve banking works and isn't interested in wasting their time listening to something that supports chem1sts crazy ideas about the economy. So what happens when they print a shed load of inflation in a few hours? What about the million youth unemployed (and rising)? What about the monopoly on money? What about the monopoly on land and the inverse farm size productivity relationship? Our economy must be perfectly fine in your eyes. Tell me cyclone, where did you get your tinted glasses, is the government running a subsidy program for them? Link to comment Share on other sites More sharing options...
epiphany Posted February 9, 2012 Share Posted February 9, 2012 Interest earned by a private bank is used to pay for staff, goods, services etc. Only that? Really? That might be how a co-op is run (i.e. enough profit just to cover the running costs) but private banks have external shareholders which is what most of their profit margin covers. Investing in public services is a role for central government from taxation etc. That's a statist view. I would like to see the role of the state reduced in that department. One key benefit of more social control over banking is that it CAN help reduce the direct tax burden on individuals by funding social projects. Link to comment Share on other sites More sharing options...
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