Posted on 06/07/2005 2:57:08 PM PDT by blueberry12
Debt issued by banks can never be repaid in full. Some people can repay everything while others cannot repay anything at all. All this is because every time banks lend money, they expect the borrower to pay back the money plus interest. But where do they expect people to earn the interest?
Here is the problem: Let's say the federal reserve prints a trillion dollars. Banks put that money into circulation by lending it to the people. The people invest the money and somehow they pay it back with interest. The question is where do they get the money to pay the interest? Someone needs to borrow money so that others can pay the interest on their loan. Therefore, debts can never be repaid in full.
Federal, state, and local government debts are increasing as time goes by. The majority of American people are indebted just like the governments.
If we all tried to pay off all the debt we owe, then we would find out that it is impossible, because we collectively owe more than the amount of money that is available among us. So, if we all tried to pay off all the debt we owe, a shortage of money would develop. In other words, we would create a depression.
There are some options how to solve this money shortage: 1) Somebody would have to print dollar bills illegally in order to make up for the money shortage. 2) People who are totally in debt could declare bankruptcy so they would not have to pay the bank the money that does not exist. 3) Banks would have to release some debt to allow borrowers to repay the money plus the interest. 4) Or we could borrow more money to repay our current debt... but that wouldn't erase our debts. It would only worsen the case.
If this is true, then that means the financial system is currently designed to eventually self-destruct. The debt grows and grows... But some people believe that it cannot grow forever. Personally, I don't know what to believe.
I would like to hear your opinions on this subject. Do you think it is possible for debt to grow forever? Why or why not?
The borrower is servant to the lender.
(Proverbs 22:7)
God commanded Israel to release their debts regularly, and I can understand the reason.
"At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD'S release. Of a foreigner you may require it; but you shall give up your claim to what is owed by your brother, except when there may be no poor among you; for the LORD will greatly bless you in the land which the LORD your God is giving you to possess as an inheritance..."
(Deuteronomy 15:1-4)
Is God going to pay my bills then?
As far as I know God does not pay bills. :)
I take that either you, or the author, did not take Econ 101. Your posting is really full of commom errors. You talk about printing money, but money isn't created by printing. Only 10% of the broadest measure of money supply is in currency. Etc. If your interested in learning more I might suggest "Money" by John K. Gallbrath, despite him being a liberal it's a decent intro to the topic.
God has blessed me greatly but I have always had to fill out the checks when the bill comes due. This is the natural order of things.
Don't make fun out of this. This is not a joke. I want some real answers.
But the ammount of "money" in our system FAR exceeds the ammout of printed cash. You don't get the money to repay debt from other loans, you get it by trades goods or services for money in the form of a job or business. And most of what banks lend comes from customer deposits. The cash they put in circulation is more generally the result of customer withdrawal than loans, most lent money never becomes cash, it's generally in checks or sometimes just eletronic fund transfer certificates.
So, it IS possible to repay all of the debt?
Yes, since the money floating around in the system has direct relationship either to the printed cash or debt level none of the three item restrict each other.
Oops, big typo, should read "...system has NO direct relationship..."
Someday I gotta get the fingers moving as fast as the brain.
I don't get it. How does money enter into circulation if not through lending or borrowing?
Well first thing you need to understand is that "money" is a very broad word that includes lots of different things that enter the system in different ways.
Cash enters our system through the banks, you put money in the bank in some form (maybe cash, maybe an EFT from your direct deposit, maybe some other way). Then later you go to the bank to get some of your money out as cash, meanwhile behind the scenes the bank has sent old beat up cash back to the Fed for destruction and the Fed has sent them shiny new cash, the cash you get might include some of that shiny new cash, or it might be some not so shiny but still usable cash. Either way the cash gets into circulation primarily by replacing money that was already yours before it was handed to you.
In the more general stroke money enters circulation through wealth expansion. We produce wealth every day in this country by harvesting raw goods (wood, stone, metal, food) from the earth. Raw goods are turned into refined goods which causes them to gain in value thus adding more wealth. At various stages in this process these things are sold for some form of money, maybe cash but probably a check or EFT.
There are also Federal Reserve loans which bring money, but not cash, into the economy. Though not all loans stem from the Fed as a source.
The important thing to remember is that the vast majority of money that circulates through our economy never has any level of representation that is produced by the Fed. It moves in checks, in EFTs, in stock certificates, in travelers checks (which are different than regular checks), in debit cards (which is kind of an EFT but not really), or various other forms I don't remember.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.