splodgeyAl Posted February 9, 2012 Share Posted February 9, 2012 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.So what if it's not a personal loan? Well apart from it being worse, as there is only principle created, but we owe principle + interest. It would be irrelevant if an individual could afford to pay off "their" share. That money would be swallowed by interest on the remainder in probably minutes Link to comment Share on other sites More sharing options...
splodgeyAl Posted February 9, 2012 Share Posted February 9, 2012 Inability to repay loans (ie bad debts) is what has brought the system into turmoil. It is a fallacy that banks create money from nothing. They can only lend (around 90%) of money deposited with them - "savings" is probably the easiest term to use. Interest charged by banks is their profit from taking the risk to people who will default (plus covering their expenses). Now you can argue (as I would) that the banks shouldn't have made loans to people who posed an excessive risk - and that the reward system for bankers was all wrong - taking a cut from the deal rather than a cut from any surplus that materialises in the long term. And this doesn't even start to explain governments role in the mess. If the idea that banks creating money is a fallacy, why does it say, on page 105 of the PDF linked-to below, from the Bank of England's website, thatSubject only but crucially to confidence in their soundness, banks extend credit by simply increasing the borrowing customer’s current account, which can be paid away to wherever the borrower wants by the bank ‘writing a cheque on itself’. That is, banks extend credit by creating money. Here's the original PDF: http://www.bankofengland.co.uk/publications/quarterlybulletin/qb0801.pdf Link to comment Share on other sites More sharing options...
splodgeyAl Posted February 9, 2012 Share Posted February 9, 2012 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. Certain amount is about 97% of it. And yes, it's a loan, accruing interest. It is therefore, mathematically impossible to pay off that loan. Link to comment Share on other sites More sharing options...
Longcol Posted February 9, 2012 Share Posted February 9, 2012 Certain amount is about 97% of it. And yes, it's a loan, accruing interest. It is therefore, mathematically impossible to pay off that loan. Then how come millions of people (including myself) have paid off loans and mortgages that accrue compound interest? Link to comment Share on other sites More sharing options...
Cyclone Posted February 9, 2012 Share Posted February 9, 2012 Certain amount is about 97% of it. And yes, it's a loan, accruing interest. It is therefore, mathematically impossible to pay off that loan. How is it mathematically impossible to pay off? Link to comment Share on other sites More sharing options...
splodgeyAl Posted February 9, 2012 Share Posted February 9, 2012 Then how come millions of people (including myself) have paid off loans and mortgages that accrue compound interest?Would you have been able to if the loan had been 97% of all the money you've ever had, including the loan principle? Link to comment Share on other sites More sharing options...
splodgeyAl Posted February 9, 2012 Share Posted February 9, 2012 How is it mathematically impossible to pay off? Show me the maths then Link to comment Share on other sites More sharing options...
Cyclone Posted February 9, 2012 Share Posted February 9, 2012 So what if it's not a personal loan? Well apart from it being worse, as there is only principle created, but we owe principle + interest. It would be irrelevant if an individual could afford to pay off "their" share. That money would be swallowed by interest on the remainder in probably minutes So not only are claiming that we all personally owe for our portion of the countries debt, you're claiming that even if we can personally afford to cover our portion, we then become liable for the interest on other peoples portions. You're off in lala land as far as I can tell. The country owes that money, and it's to be paid for with future revenue, it's not a personal debt, no individual can be held liable for it, but if we were to apportion it out as you suggest, then I would pay off my portion and I wouldn't then be liable for the interest generated on the amounts that other people couldn't pay off. If we were to do that though I'd be expecting a vastly reduced tax bill in the future as there would no longer be any need for tax revenue to pay off the debt. Link to comment Share on other sites More sharing options...
Cyclone Posted February 9, 2012 Share Posted February 9, 2012 Show me the maths then It's your assertion.... you prove it. Link to comment Share on other sites More sharing options...
splodgeyAl Posted February 9, 2012 Share Posted February 9, 2012 So not only are claiming that we all personally owe for our portion of the countries debt, you're claiming that even if we can personally afford to cover our portion, we then become liable for the interest on other peoples portions. You're off in lala land as far as I can tell. The country owes that money, and it's to be paid for with future revenue, it's not a personal debt, no individual can be held liable for it, but if we were to apportion it out as you suggest, then I would pay off my portion and I wouldn't then be liable for the interest generated on the amounts that other people couldn't pay off. If we were to do that though I'd be expecting a vastly reduced tax bill in the future as there would no longer be any need for tax revenue to pay off the debt. I'm not asserting that individuals are responsible for a proportion, it's a fairly standard way of describing the extent of the national debt, and I was following up a point made on that. If we were all to pay back our portion, there would be no money left in circulation Link to comment Share on other sites More sharing options...
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