This Forum is Closed
January 31, 2023, 11:01:10 pm
Welcome, Guest. Please login or register.

Login with username, password and session length
News: GGF now has a permanent home:
  Home Help Search Links Staff List Login Register  

Monetary Reform!

Pages: [1]   Go Down
Author Topic: Monetary Reform!  (Read 15538 times)
Global Moderator
Sr. Member
Offline Offline

Posts: 455


View Profile
« on: April 28, 2011, 11:22:45 am »

At the risk of sounding off here.

The main reason for interest at all is because 8 out of 10 businesses fail within 2 years.

You've got it backwards: unpayable interest debt is one of the primary reasons why so many businsses fail in the first place.

So you're confusing cause and effect.

When the 8 do all that money is still in the economy and is not coming back to the banks directly.

That doesn't change

(a) the fact that bankrupties have a deflationary impact on our debt-based money supply since they reduce in value the collateral-backing of that money supply;

(b) the fact that when the principal of a bank loan is repaid, the money initially created by that loan is not "still in the economy," but in fact vanishes back into the nothing out of which the bank created it; nor

(c) the fact that the money needed to pay the usurious interest on all these money supply-expanding "loans" is never created to begin with, which means there's always a built-in shortage of money.

You can try to explain it away all you want, the fact remains that it's a musical chairs system.

Interest keeps down inflation when the other 8 businesses fail.

You've got it backwards again: unpayable interest debt is one of the primary causes of inflation, because it's only by raising prices that indebted business owners are able to "capture" -- through the process and production-and-exchange -- the necessary portion of other people's loan principal to pay the interest they owe.

As I explained earlier in this thread, what keeps cost-push inflation from spiraling out of control is

* the fact that money vanishes from the money supply whenever the principal of a bank loan is repaid; and

* the deflationary impact that mortage loan defaults have on the money supply, due to the fact that pledged collateral usually sells for much less than what the bankrupted homeowner or business owner owed on it, and how this in turn forces the bank to offset the unpaid principal dollar for dollar from its capital assets. The more this happens nationwide, the less banks as a whole can lend. The less banks can lend, the more the gap between (a) the overall indebtedness of the economy (principal-plus-interest) and (b) the amount of money there is in circulation to pay it off increases (since interest debt continues to increase at a compounding rate regardless of whether the money supply increases along with it). And as that gap increases, more and more people are consequently forced into bankruptcy, thus creating a vicious, self-perpetuating cycle of bankruptcies, increased money shortages, followed by still further bankruptcies.
« Last Edit: April 28, 2011, 11:25:27 am by Geolibertarian » Report Spam   Logged

"For the first years of [Ludwig von] Mises’s life in the United States...he was almost totally dependent on annual research grants from the Rockefeller Foundation.” -- Richard M. Ebeling

Pages: [1]   Go Up
Jump to:  

Powered by EzPortal
Bookmark this site! | Upgrade This Forum
Free SMF Hosting - Create your own Forum

Powered by SMF | SMF © 2016, Simple Machines
Privacy Policy
Page created in 0.058 seconds with 17 queries.