zanket said:
You’re presenting only one side of it. The borrowed money was used to buy things. Americans put themselves in hock voluntarily. Borrowing can be good if the interest rate is low and debt levels are kept in check (they aren't now). The US is not owned by banks but ultimately by the people who gave the banks money that the banks then loaned to the US.
Errrmm, I am indeed presenting one side, but the rest of it isnt qutie right. You see, the bank dont lend money that you gave them. The banks lend vastly more money than they have in stock, or on deposit. Thats the point. There is no balance to the system. The bank lends 1,000 a milion bucks each, and puts in their books, that each person has - 1,000,000. Then when it is paid back, the banks have 1,000,000,000. (plus interest.) However, they never necessarily had that billion dollars to begin with. Thats the point I'm trying to make, is that there is a total decoupling between the money in circulation and what it is actually based upon, the banks get to create the money as they wish. How much money are banks required to have on deposit when they lend? I think its only a few percent of what they lend. The res tof it is imaginary, on the money go round. The only reason it keeps working is if, indeed, people keep borrowing and putting more money in circulation. What happens when people borrow less.
zanket said:
If the government issued the money rather than private banks, then the government would be a bank and probably not a very efficient one. Many banks offer some competition that keeps costs lower. Remember the banks don’t keep all of the 2% interest or whatever. They keep only the spread between what they pay their depositors (the people who ultimately own the US) and what they get paid by the US. They are simply a middleman.
Where does efficiency come into the simple act of creating money? There are sensible ideas about how the gvt can create debt free money, its just nobody looks at them. I'l have to nip away and read up on them again. The banks are not simply middlemen, like I said, they create the money.
ASk yourself why the national debt gets bigger. ASk yourself what the inflation is. Its an increase in the money supply, feeding through to prices. Then think of it operating in an economy where prices are falling due to technological advances and exploitation of cheap labour. In this country, the UK, all the money is feeding into the housing market, pushing prices so ridiculously high its unbelievable.
