Atlas Shrugged: Economics 101
Posted by The Interest on January 23, 2009
At the Atlas Shrugged, they understand the problem:
The monetary system we operate is a debt based, fiat, Fractional Reserve Banking System. In that system money is created out of thin air at the point when a new debt is written which is then spent into the general money supply. Similarly, when the debt is repaid by extracting it from the general money supply, the money is destroyed, disappearing into the black hole from whence it came. During the term of the debt(loan) it is repaid with interest. However, only the capital was created out of thin air, the interest was not created at all. Therefore, to enable the debtor to pay back the principal plus interest he must take some of someone else’s capital from the general money supply to do that. For there to be enough money in the general money supply to remove more than you put in there must be an ever-increasing number of new loanees adding their newly-created capital to the pot.
Now, let’s all ask, “Where’s the Interest?”
Read the rest here.
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