| Subject: | [socialcredit] Re: more on -- typo in para eight | | Date: | , July 26, 2004 10:03:43 (+0400) | | From: | Wallace <wmklinck @....ca>
|
Bill, I believe that in paragraph eight there is a typo. I believe that you
meant 50 [cents] in the pockets of the banker. -- Wally
<william_b_ryan@yahoo.com> wrote:
>
> Usually the fallacy goes something like this: There
> is only ten dollars existing in the world that arose
> in the first instance entirely from a bank loan, that
> must be repaid plus ten percent interest at the end
> of one year. How is it possible to pay back the
> borrowed principal without having to borrow the money
> to pay the interest, thereby compounding the
> underlying debt?
>
> The simple answer is that there are many overlapping
> loans in the real world, but to disprove the rather
> trivial fallacy all we need to assume is there are
> merely two loans that are recurring.
>
> The loan granted at T-zero is in the amount of five
> dollars, payable in one year at ten percent. The
> second loan in the amount of five dollars is granted
> six months later, at T-one/half, payable one year
> after that at five percent.
>
> At this point in time there are ten dollars in
> "circulation," constituting the credit expansion
> phase of the circuit, which is paid in wages to
> employees during the course of time.
>
> At the end of the first year $5.50 is due and payable
> including principal plus interest to the banker,
> which the entrepreneur pays, at the same time
> collecting fifty cents profit for himself on his
> transactions with consumers.
>
> At this point, the employees have received income in
> the amount of ten dollars, the banker has received
> interest income in the amount of fifty cents, and the
> entrepreneur has received fifty cents profit.
>
> A third loan is granted at T-one, in the amount of
> five dollars, payable, as before, in one year at ten
> percent.
>
> At this point there are nine dollars in the pockets
> of the employees, fifty in the pockets of the banker,
> and fifty cents in the pocket of the entrepreneur.
>
> When the second loan comes due six months later at T-
> one and one/half, the principal in the amount of five
> dollars is paid to the banker, plus fifty cents
> interest, plus fifty cents profit to the
> entrepreneur.
>
> At that point the transient period of the credit
> expansion has ended and has stabilized.
>
> Year after year after that, the banker will earn one
> dollar in interest per year, the entrepreneur will
> earn one dollar per year in profit, and the employees
> will earn ten dollars in salaries and wages per year.
>
> Total income per period being earned by the community
> in its totality is twelve dollars per year, on loan
> principal not exceeding ten dollars. The banker is
> supplying financial services, the entrepreneur is
> supplying entrepreneur services, and the employees
> are supplying employee services to one another in the
> cooperative community, year after year.
>
> It is conceptually possible to devolve at this point
> into some kind of "underconsumptionist" argument,
> which would be in departure from steady-state--where
> either employees, entrepreneurs or bankers do not
> respectively spend all their income for some reason
> or another.
>
> This could however have nothing to do with interest
> per se, in any respect that could distinguish its
> effects from not spending from income from any
> source.
> -
>
>
>
>
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Re: more on -- ty
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