The flawed economic model.
- Thread starter joe-90
- Start date
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The plan is to live long and die quick and leave everything to the wife and kid
Damn.
P
Paul_C
Not just government borrowing, but everybody's borrowing, because of the crazy system which has operated for now for a very long time, known as fractional reserve.
Most people assume that if they borrow £1000 from the bank, it's because the bank already has that £1000 on deposit from somebody else. It simply isn't the case, because the bank is allowed to simply "create" money it loans in the form of debt. The ratio of maximum such debt allowed to actual reserves held has increased steadily over time. So the banks are loaning out money they don't actually have, then demanding not only repayment of the money which was "magicked" into existence out of thin air but also interest on top. If there isn't enough real money in circulation, where can that interest come from, looking at the system as a whole? It can come only by creating more money in the form of debt to pay it off - Hence ever-increasing levels of debt.
And even the "real" money in circulation, those pieces of paper that most people imagine as being money in the form of pound notes, dollar bills, and so on isn't really any such thing any more, because it's become fiat currency, not actually backed up by anything of value.
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But as the unit "value" of currency is always decreasing, debts that are eye-watering now will be chicken-feed in the future. I don't have the figures, but I expect at some point in the past the UK might have had a national debt of £1 million. But that might have been in the days when even a well-off person earned £1 p.a.
Without interest payments, countries could afford to live with a shrinking economy. Most people could benefit from efficiencies in modern production, enjoying increasing higher standard of living, leisure and savings for less work.
As it is, people in the South East for instance pay (or waste) about 10 times what their house would cost to build. The few people in work have to work long and hard to pay the bankers. Others are kept out of work as bankers don't support businesses/premises that could employ them as they are not 'cost effective'.
In the meantime the foreign earnings from bankers keeps our currency too strong and cripples our manufacturing industry.
As it is, people in the South East for instance pay (or waste) about 10 times what their house would cost to build. The few people in work have to work long and hard to pay the bankers. Others are kept out of work as bankers don't support businesses/premises that could employ them as they are not 'cost effective'.
In the meantime the foreign earnings from bankers keeps our currency too strong and cripples our manufacturing industry.
In those days, the King would often have killed the bankers to avoiding repaying the debt.
