How to avoid economic collapse and break down of civilization?

[jdf5]

"97% of money in the modern economy is created by banks when they make loans. The government only create 3% of money."

 

[bilby]

But debt can´t continue up forever of course.

Why not? Do you imagine that we might run out of numbers?

As the economy grows, more people owe debts to one another for goods and services supplied to them. We call those debts ‘money’. There’s no limit to how much money can exist, because it’s literally just numbers - the value of goods and services supplied but not yet redeemed as other goods or other services.

I go to work, because I need groceries, rent, household goods, gasoline, repairs to stuff, etc., etc. But my boss doesn’t give me any of those things. He owes me them; But he doesn’t have them. So instead he gives me money - a representation of the debt he owes me. And the clever thing about debts that are expressed as money, is that I can pass those debts around to other people. Instead of me having to go to my boss and ask for a tin of beans, I can go to the store, and give them some of the debt, in exchange for a tin of beans. Now my boss owes the store, for those beans.

That’s what having money MEANS. It means the economy owes you a debt. Because debt and money are THE SAME THING.

Of course, the bigger the economy gets, the more debts there are that haven’t yet been settled. So the more money there must be. But money cannot ‘run out’, because the currency issuing entities (typically either nation states, or fractional reserve lenders) can always issue more - it’s just numbers. We are never going to run out of numbers.

 

[bilby]

Looking for some sources that may explain this better. Some quotes.​

THE PRIVATIZED MONEY SYSTEM​

"The critical problem is in how and by whom our money is created, which has caused untold suffering, poverty and wars and now even threatens human existence on our planet. Our money system has been privatized. In the current system, money is created as a debt at the instant a bank makes a loan, by simply adding an entry in the ledger -- in other words, created out of thin air. In the current system, this DEBT-MONEY must always be paid back with interest. However, only the money representing the principal of the loan is created; the money for the interest is NEVER CREATED. The money to pay the interest must come from the principal of someone else; therefore, there is no way to pay off all debt. This creates a highly competitive economy with "1%" winners and "99%" losers. Debt must always increase."

If that’s a quote, you should supply attribution. Who are you quoting?

 

[Swammerdami]

Money sure is a fascinating topic! Is it all just debt? Precious metal? Worthless fiat paper issued by incontinent government? I think ANY of these dogmatic views will mislead. Simplest is often to focus on a single transaction in a simple economy. Farmer Joe borrows from a bank to pay laborers to construct irrigation ditches. He hopes to repay the loan with bags of barley from his now-more-productive farm. (The bank might not accept the barley and require that Joe travel to the market and trade his barley for pieces of paper — so what?) No new debt is created: the interest is paid with NEW production (or, if the farming investment is a failure, by a transfer of wealth from Joe to the banker).

Looking at the early history of money, or the use of money in primitive societies is fascinating, but would muddy the waters here. But as recently as a century ago, and for thousands of years before that, money was gold, silver or promises to pay with gold or silver. The first use of fractional-reserve banking, similar to the systems of today, was in the distant murky past. A good test of one's monetary viewpoint is to see how well it would have applied a century ago.

Fiat money (or promises to pay precious metal that can never be fulfilled) has usually become worthless. (One notable exception is the base-metal coinage issued by the Roman Empire; these coins were widely accepted because of Rome's great power.) I think it best to distinguish central bank money from other forms of fiat money. This is mainly because most central banks are run by hard-nosed managers INDEPENDENT of government who are under orders to avoid or limit inflation. And recall that when the FRB was created, paper dollars could still be traded for gold at a fixed price.

Private banks have been financing government debt for many centuries. "QE" (at least as applied in U.S.A.) is a very recent innovation in which central banks take on large quantities of such debt. This can be important conceptually, but those trying to understand money creation would do well to see if their viewpoint applies to the 20th century, before QE.

Extremist views on money found at Youtube can be divided roughly into two OPPOSITE camps. One camp regards central-bank money and privately-created money as scams or boondoggles; this camp wants us to start using REAL money again, either gold or — put your coffee cup down! — Bitcoin.

The other YouTube camp, including LaRouche, loves the idea of fiat money; they just don't want it controlled by hard-nosed bankers. LaRouche proposed in 2009 that U.S.A., Russia, India and China get together and create a world currency. It wouldn't be "based on debt"; the Four Governments would just print it and drop it out of helicopters wherever politicians told them to. (Euro and sterling bankers were apparently too hard-nosed to be invited into LaRouche's scheme.)

Why make it so complicated? You don´t agree that only a new loan can pay for the interest on the global level?

Money IS confusing and global finance does SEEM like it might be precarious. If Farmer Joe's barley crop doesn't come in he might resort to a loan-shark.

But best is to avoid simplistic memes like "money is debt" and focus on a basic understanding. Here's Albert Einstein:

"The wireless telegraph is not difficult to understand. The ordinary telegraph is like a very long cat. You pull the tail in New York, and it meows in Los Angeles. The wireless is the same, only without the cat."

Modern money creation is not difficult to understand. A century ago banks had gold in their vaults and issued paper that could be exchanged for that gold. Modern banking is just the same, only without the gold.

 

[jdf5]

But debt can´t continue up forever of course.

Why not? Do you imagine that we might run out of numbers?

As the economy grows, more people owe debts to one another for goods and services supplied to them. We call those debts ‘money’. There’s no limit to how much money can exist, because it’s literally just numbers - the value of goods and services supplied but not yet redeemed as other goods or other services.

I go to work, because I need groceries, rent, household goods, gasoline, repairs to stuff, etc., etc. But my boss doesn’t give me any of those things. He owes me them; But he doesn’t have them. So instead he gives me money - a representation of the debt he owes me. And the clever thing about debts that are expressed as money, is that I can pass those debts around to other people. Instead of me having to go to my boss and ask for a tin of beans, I can go to the store, and give them some of the debt, in exchange for a tin of beans. Now my boss owes the store, for those beans.

That’s what having money MEANS. It means the economy owes you a debt. Because debt and money are THE SAME THING.

Of course, the bigger the economy gets, the more debts there are that haven’t yet been settled. So the more money there must be. But money cannot ‘run out’, because the currency issuing entities (typically either nation states, or fractional reserve lenders) can always issue more - it’s just numbers. We are never going to run out of numbers.

Eventually there are to few possible new loans left to pay for the old loans interest.

 

[jdf5]

Looking for some sources that may explain this better. Some quotes.​

THE PRIVATIZED MONEY SYSTEM​

"The critical problem is in how and by whom our money is created, which has caused untold suffering, poverty and wars and now even threatens human existence on our planet. Our money system has been privatized. In the current system, money is created as a debt at the instant a bank makes a loan, by simply adding an entry in the ledger -- in other words, created out of thin air. In the current system, this DEBT-MONEY must always be paid back with interest. However, only the money representing the principal of the loan is created; the money for the interest is NEVER CREATED. The money to pay the interest must come from the principal of someone else; therefore, there is no way to pay off all debt. This creates a highly competitive economy with "1%" winners and "99%" losers. Debt must always increase."

If that’s a quote, you should supply attribution. Who are you quoting?

It´s from here: https://greensformonetaryreform.org/problem.shtml

 

[bilby]

But debt can´t continue up forever of course.

Why not? Do you imagine that we might run out of numbers?

As the economy grows, more people owe debts to one another for goods and services supplied to them. We call those debts ‘money’. There’s no limit to how much money can exist, because it’s literally just numbers - the value of goods and services supplied but not yet redeemed as other goods or other services.

I go to work, because I need groceries, rent, household goods, gasoline, repairs to stuff, etc., etc. But my boss doesn’t give me any of those things. He owes me them; But he doesn’t have them. So instead he gives me money - a representation of the debt he owes me. And the clever thing about debts that are expressed as money, is that I can pass those debts around to other people. Instead of me having to go to my boss and ask for a tin of beans, I can go to the store, and give them some of the debt, in exchange for a tin of beans. Now my boss owes the store, for those beans.

That’s what having money MEANS. It means the economy owes you a debt. Because debt and money are THE SAME THING.

Of course, the bigger the economy gets, the more debts there are that haven’t yet been settled. So the more money there must be. But money cannot ‘run out’, because the currency issuing entities (typically either nation states, or fractional reserve lenders) can always issue more - it’s just numbers. We are never going to run out of numbers.

Eventually there are to few possible new loans left to pay for the old loans interest.

Why? What makes a new loan impossible?

(Leaving aside your other gross error in believing that a new loan is necessary to pay interest - which ignores the entire concept of productivity, as others have already explained).

 

[jdf5]

But debt can´t continue up forever of course.

Why not? Do you imagine that we might run out of numbers?

As the economy grows, more people owe debts to one another for goods and services supplied to them. We call those debts ‘money’. There’s no limit to how much money can exist, because it’s literally just numbers - the value of goods and services supplied but not yet redeemed as other goods or other services.

I go to work, because I need groceries, rent, household goods, gasoline, repairs to stuff, etc., etc. But my boss doesn’t give me any of those things. He owes me them; But he doesn’t have them. So instead he gives me money - a representation of the debt he owes me. And the clever thing about debts that are expressed as money, is that I can pass those debts around to other people. Instead of me having to go to my boss and ask for a tin of beans, I can go to the store, and give them some of the debt, in exchange for a tin of beans. Now my boss owes the store, for those beans.

That’s what having money MEANS. It means the economy owes you a debt. Because debt and money are THE SAME THING.

Of course, the bigger the economy gets, the more debts there are that haven’t yet been settled. So the more money there must be. But money cannot ‘run out’, because the currency issuing entities (typically either nation states, or fractional reserve lenders) can always issue more - it’s just numbers. We are never going to run out of numbers.

Eventually there are to few possible new loans left to pay for the old loans interest.

Why? What makes a new loan impossible?

(Leaving aside your other gross error in believing that a new loan is necessary to pay interest - which ignores the entire concept of productivity, as others have already explained).

How can productivity create the money necessary to pay the interest? Without a loan i mean.
That money do not exist on the global level without a loan.

 

[bilby]

But debt can´t continue up forever of course.

Why not? Do you imagine that we might run out of numbers?

As the economy grows, more people owe debts to one another for goods and services supplied to them. We call those debts ‘money’. There’s no limit to how much money can exist, because it’s literally just numbers - the value of goods and services supplied but not yet redeemed as other goods or other services.

I go to work, because I need groceries, rent, household goods, gasoline, repairs to stuff, etc., etc. But my boss doesn’t give me any of those things. He owes me them; But he doesn’t have them. So instead he gives me money - a representation of the debt he owes me. And the clever thing about debts that are expressed as money, is that I can pass those debts around to other people. Instead of me having to go to my boss and ask for a tin of beans, I can go to the store, and give them some of the debt, in exchange for a tin of beans. Now my boss owes the store, for those beans.

That’s what having money MEANS. It means the economy owes you a debt. Because debt and money are THE SAME THING.

Of course, the bigger the economy gets, the more debts there are that haven’t yet been settled. So the more money there must be. But money cannot ‘run out’, because the currency issuing entities (typically either nation states, or fractional reserve lenders) can always issue more - it’s just numbers. We are never going to run out of numbers.

Eventually there are to few possible new loans left to pay for the old loans interest.

Why? What makes a new loan impossible?

(Leaving aside your other gross error in believing that a new loan is necessary to pay interest - which ignores the entire concept of productivity, as others have already explained).

How can productivity create the money necessary to pay the interest? Without a loan i mean.
That money do not exist on the global level without a loan.

Who cares about money? I can’t eat money, or drive it, or wear it.

The economy is measured in money, but it exists as goods and services.

Money comes and goes, but productivity is what matters. Money is just a way to measure things that are fundamentally dissimilar. If I make shoes, how many do I need to make to earn a tin of beans?

 

[Harry Bosch]

Looking for some sources that may explain this better. Some quotes.​

THE PRIVATIZED MONEY SYSTEM​

"The critical problem is in how and by whom our money is created, which has caused untold suffering, poverty and wars and now even threatens human existence on our planet. Our money system has been privatized. In the current system, money is created as a debt at the instant a bank makes a loan, by simply adding an entry in the ledger -- in other words, created out of thin air. In the current system, this DEBT-MONEY must always be paid back with interest. However, only the money representing the principal of the loan is created; the money for the interest is NEVER CREATED. The money to pay the interest must come from the principal of someone else; therefore, there is no way to pay off all debt. This creates a highly competitive economy with "1%" winners and "99%" losers. Debt must always increase."

If that’s a quote, you should supply attribution. Who are you quoting?

The above are his beliefs. He's trying to find a source that supports his beliefs.

 

[jdf5]

Looking for some sources that may explain this better. Some quotes.​

THE PRIVATIZED MONEY SYSTEM​

"The critical problem is in how and by whom our money is created, which has caused untold suffering, poverty and wars and now even threatens human existence on our planet. Our money system has been privatized. In the current system, money is created as a debt at the instant a bank makes a loan, by simply adding an entry in the ledger -- in other words, created out of thin air. In the current system, this DEBT-MONEY must always be paid back with interest. However, only the money representing the principal of the loan is created; the money for the interest is NEVER CREATED. The money to pay the interest must come from the principal of someone else; therefore, there is no way to pay off all debt. This creates a highly competitive economy with "1%" winners and "99%" losers. Debt must always increase."

If that’s a quote, you should supply attribution. Who are you quoting?

The above are his beliefs. He's trying to find a source that supports his beliefs.

You want to explain how you are going to create the money for interest on debt without a new loan and a printer.

 

[Harry Bosch]

Looking for some sources that may explain this better. Some quotes.​

THE PRIVATIZED MONEY SYSTEM​

"The critical problem is in how and by whom our money is created, which has caused untold suffering, poverty and wars and now even threatens human existence on our planet. Our money system has been privatized. In the current system, money is created as a debt at the instant a bank makes a loan, by simply adding an entry in the ledger -- in other words, created out of thin air. In the current system, this DEBT-MONEY must always be paid back with interest. However, only the money representing the principal of the loan is created; the money for the interest is NEVER CREATED. The money to pay the interest must come from the principal of someone else; therefore, there is no way to pay off all debt. This creates a highly competitive economy with "1%" winners and "99%" losers. Debt must always increase."

If that’s a quote, you should supply attribution. Who are you quoting?

The above are his beliefs. He's trying to find a source that supports his beliefs.

You want to explain how you are going to create the money for interest on debt without a new loan and a printer.

You bet! I pay the interest from the excess cash flow that I have left over each month. I get my paycheck then pay all my bills and debt service. Luckily for me, my expenses and total debt service are a little less than my paycheck (teenagers will eat into your paycheck). Outside of student debt, I'll never borrower a dime in my life. Very debt adverse.

 

[Patooka]

Fuck this. I'm convinced. I'm going to Bunnings ("the shops" for you international members) and getting a shovel to build a bunker.

Then I realised that by paying for a shovel, the need for building a bunker for the End Times is quite premature. Fuck me I'm glad I was only halfway through. Otherwise I'd feel like a right idiot.

 

[laughing dog]

But where is the money for the interest going to come from if not from a new loan?

Savings.

That money comes from a loan as well no?

Not necessarily.

We don´t create money. You may get some interest when saving but it´s lower than for a loan.

In example, suppose my savings is money stuffed in my mattress or in the form of wood flutes I carve from branches I find snd then sell for cash whenever I need extra purchasing power.

Explain to me how those sources of fund necessarily require additional loans at the global level.

 

[Jason Harvestdancer]

But where is the money for the interest going to come from if not from a new loan?

Savings.

That money comes from a loan as well no?

Not necessarily.

We don´t create money. You may get some interest when saving but it´s lower than for a loan.

In example, suppose my savings is money stuffed in my mattress or in the form of wood flutes I carve from branches I find snd then sell for cash whenever I need extra purchasing power.

Explain to me how those sources of fund necessarily require additional loans at the global level.

Although I think jdf5 is wrong, you aren't speaking the same language he is. You are talking micro, he is talking macro.

 

[laughing dog]

But where is the money for the interest going to come from if not from a new loan?

Savings.

That money comes from a loan as well no?

Not necessarily.

We don´t create money. You may get some interest when saving but it´s lower than for a loan.

In example, suppose my savings is money stuffed in my mattress or in the form of wood flutes I carve from branches I find snd then sell for cash whenever I need extra purchasing power.

Explain to me how those sources of fund necessarily require additional loans at the global level.

Although I think jdf5 is wrong, you aren't speaking the same language he is. You are talking micro, he is talking macro.

Micro understanding builds macro thinking.

 

[jdf5]

But where is the money for the interest going to come from if not from a new loan?

Savings.

That money comes from a loan as well no?

Not necessarily.

We don´t create money. You may get some interest when saving but it´s lower than for a loan.

In example, suppose my savings is money stuffed in my mattress or in the form of wood flutes I carve from branches I find snd then sell for cash whenever I need extra purchasing power.

Explain to me how those sources of fund necessarily require additional loans at the global level.

The money in your mattress and the money you receive from the flutes came into existance through a loan to.

 

[laughing dog]

But where is the money for the interest going to come from if not from a new loan?

Savings.

That money comes from a loan as well no?

Not necessarily.

We don´t create money. You may get some interest when saving but it´s lower than for a loan.

In example, suppose my savings is money stuffed in my mattress or in the form of wood flutes I carve from branches I find snd then sell for cash whenever I need extra purchasing power.

Explain to me how those sources of fund necessarily require additional loans at the global level.

The money in your mattress and the money you receive from the flutes came into existance through a loan to.

You are not paying attention. Earlier you claimed paying interest REQUIRED ADDITIONAL loans at the global level. How does my example REQUIRE ADDITIONAL global loans?

 

[Swammerdami]

Reviewing my own remarks, it seems that I never took a stand on the pressing question: Is money just debt? — beyond saying that concept to be at best a useless simplistic meme.

But if I were to concede that silliness, I'd let Mr. Bilby explain why it's irrelevant:

But debt can´t continue up forever of course.

Why not? Do you imagine that we might run out of numbers?

 

[Loren Pechtel]

On the local level yes but on the global level there is a shortage of money.

Assuming there is a global shortage if money, why would that mean that my earnings would necessarily require new loans?

If you are going to pay the interest, the money that do not yet exist on the global level then somewhere in the global economy a loan must be made.

You still fail to understand that when interest is paid the money doesn't just vanish.