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Message 1156
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| Subject: | Re: [socialcredit] Replying to Vic (Deus Ex Machina) -- responding to Trevor | | Date: | Saturday, April 30, 2005 23:55:49 (-0700) | | From: | William B. Ryan <w_b_ryan @.....com>
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How is this not debt virus, John?
And how is it not the pinheaded alternative to A+B?
--- John Hermann <hermann@picknowl.com.au> wrote:
> At 05:43 PM 30/04/2005 +0100, Tim Knight wrote:
> >Trevor Crosbie wrote: ". . . . . there is only two
> primary sources of the
> >'money required to pay back the interest on a bank
> loan. The first is out
> >of some store of non debt interest free cash within
> the financial system
> >or from the same source as the original debt ".
> >
> >I believe that the interest on a loan does not need
> to 'come' from
> >anywhere. The bank and the borrower simply adjust
> their outstanding debt
> >position:
> > * The bank debits the borrower's account, and
> credits its profit/loss
> > account.
> > * The borrower debits its profit/loss account,
> and credits the bank's
> > account.
> >That's it. No need to mention 'money', 'money
> supply', 'credit' or any
> >other 'money' terminology. This is exactly the
> same as a seller and buyer
> >recording the debt created by a sale. The seller
> and buyer simply adjust
> >their outstanding debt position (as recorded in the
> receivables account of
> >the seller and the payables account of the buyer):
> > * The seller debits the borrower in a
> receivables account, and credits
> > either an asset account or a profit/loss account.
> > * The buyer debits either an asset account or a
> profit/loss account,
> > and credits the seller in a payables account.
> >Again, that's it. No need to mention 'money',
> 'money supply', 'credit' or
> >any other 'money' terminology. In effect, interest
> on a loan is the
> >bank's way of charging for it's services. What
> have I missed
> >out? What's the problem?
> >
> >Best Wishes, Tim Knight
>
>
> Only the loan principal is created when a
> deposit-taking institution
> implements a new loan. Of course the interest needed
> to repay the loan in
> full also needs to be created, however under the
> present arrangement
> interest must be created continuously into the
> future - as an integral part
> of the debt-driven process of monetary growth.
>
> At every point in time the transactive part of the
> money supply (ie, M1) is
> quite insufficient to pay off the aggregate of
> principal and interest due
> on all loans, because a significant part of the
> interest income received
> from previous loans was not spent back into the
> transactive part of the
> economy, but instead was absorbed into the
> investment sector. A
> significant part of interest income is always
> transformed into the general
> reserves of lending institutions. This dynamic
> translates to a tendency
> for a shortfall of money required by the production
> and consumption sectors
> alike. And the ongoing deficiency can only be made
> up for under current
> arrangements by an ongoing and ever-increasing level
> of borrowing by
> producers and consumers - that is, an upward spiral
> in the growth of debt
> and money. The growth of the money supply is locked
> into the growth of debt.
>
> -- John H.
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