Interest rates.

[Capablanca]

I think I see now what the hangup in your thinking is Slider. In your imaginary world is the supply of money fixed or not fixed?

If the supply of money in your theoretical world is static, then, no, what you say cannot happen because like in sjfan's example for one person to be more productive it must come at the expense of another who might also have been able to use the money.

If the supply of money in your imaginary world is consistently increased then you have the same problem that is occurring now: inflation. The interest rate isn't the culprit, merely the symptom.

 

[slider123456]

Quote from sjfan:

You invalidate centuries of thinking based on a story you heard? How about this story?

Let's say there's an island that has exactly 100 coins used for exchange (the number of coins will never grow). It produces one kind of good and consumes only that good: corn. Morever, an ear of corn can be used as seed and will yield 10 ears in ten years.

Let's say in year 1, a fellow comes along and asks to borrow a coin from you for no interest. You agree (since no more coins will ever be produced). In year ten he gives you the coin back. Are you okay with this? You shouldn't be. Because in year 1, you could have used your coin to buy, say 10 ears and have 100 years by year ten. However, since you got the coin back in year ten, you could still only buy 10. You lost out on 90 ears of corn.

This problem can be remedied by asking your borrowing friend to pay you a certain number of ears of corn every year to compensate you. But what is that? That's interest.

Notice how you need to collect interest on borrowed coins in an island economy with hard, unchanged currency so long as there's production?

What you are saying is true under the present economic rules but it does not apply if there is no interest since interest drives inflation. There would be set terms and asset seizure or fraud charges for non-payment as we do now.

 

[Cache Landing]

Quote from slider123456:

What you are saying is true under the present economic rules but it does not apply if there is no interest since interest drives inflation. There would be set terms and asset seizure or fraud charges for non-payment as we do now.

But what are the set terms? If someone is borrowing money, who are they borrowing it from, and what is incentivising that person/group to lend it to them?

 

[slider123456]

Quote from Cache Landing:

This is what I mean about conspiracy theorists.

Quoted from Richard C. Cook

"Finally I arrived at the question I had tried to avoid but which readers were constantly asking about: Was the economic and monetary chaos due to some kind of conspiracy? And if so, was the conspiracy the one so many people speculated about—a plot by a handful of elitists to create a New World Order involving “one-world government,” etc.?

So my thinking turned in that direction, with my answer a qualified, “Yes.”

................................

Finally, was there a conspiracy to place George W. Bush in the office of the presidency of the United States in 2000 rather than Albert Gore? Did the U.S. government deliberately look the other way or even plan and participate in the terrorist attacks of September 11, 2001? Did the Bush administration work hand-in-hand with Alan Greenspan and the Federal Reserve in creating the housing bubble in order to keep the U.S. economy afloat while the wars in Afghanistan and Iraq were being carried out? And is planning going on behind the scenes for the U.S. military to launch an attack on Iran before George W. Bush and Richard Cheney leave office?

I believe the answer to all these questions is “Yes.”

You should realize who you are listening to, and figure out what angles they have before you accept their ideas.

I really do not subscribe to conspiricy theories. I also do not automatically decide they are not true either. The bigger the conspiracy the more proof I would need. Someone saying it is so is not proof to me.

I never read that article I saw him on a video.

 

[Cache Landing]

Quote from slider123456:

I really do not subscribe to conspiricy theories. I also do not automatically decide they are not true either. The bigger the conspiracy the more proof I would need. Someone saying it is so is not proof to me.

I never read that article I saw him on a video.

You are subscribing to one by your acceptance and propogation of his economic theory. It is based on and was written for the purpose of supporting that conspiracy theory.

 

[Capablanca]

Um Slider, what do you mean by no interest?

You think the government can simply tell the market they will ban the imposition of interest? Then what will happen is this: no lender will lend. Sources for credit will dry up. People won't be able to buy things and take advantage of opportunities. The economy will tank.

 

[slider123456]

Quote from Cache Landing:

But what are the set terms? If someone is borrowing money, who are they borrowing it from, and what is incentivising that person/group to lend it to them?

It would not be the same as borrowing there would have to be an institution that would asses the risk of giving someone a loan and would appraise property for capital loans. They would need to be heavily regulated, transparent constantly audited and give all info to the public domain.

Their would be terms of a certain number of years if the person defaulted he would have his assets seized in effect a forced sale or fraud charges and possible jail time.

 

[slider123456]

Quote from Cache Landing:

You are subscribing to one by your acceptance and propogation of his economic theory. It is based on and was written for the purpose of supporting that conspiracy theory.

No all I accept is that I pay $550,000 dollars for a $250,000 dollar house. That is proof to me.

 

[Cache Landing]

Quote from Capablanca:

Um Slider, what do you mean by no interest?

The government can artificially create 0% interest for a short time by flooding the market with money leading to inflation.

I don't think he really knows what he means by no interest. It sounded good in a video from a guy who is trying to prove that the Bilderberg Group is running the world. Since it sounded good, it must make sense.

 

[slider123456]

Quote from Capablanca:

Um Slider, what do you mean by no interest?

The government can artificially create 0% interest for a short time by buying all the debt out there.

But I don't get the sense that's what you are thinking. You think the government can simply tell the market they will ban the imposition of interest? Then what will happen is this: no lender will lend. Sources for credit will dry up. People won't be able to buy things and take advantage of opportunities. The economy will tank.

No it would have to be a economic reform that people want to put into effect in great numbers.