| Subject: | [socialcredit] Part 2: Extrapolating A+B | | Date: | Thursday, September 29, 2005 08:12:10 (-0700) | | From: | William B. Ryan <w_b_ryan @.....com>
|
"If the lenders use all their interest and other types
of income to buy goods and services, there will be no
exponential growth of the debt in the society. In that
case all interest costs will turn back as income to
the rest of the society.
"If the lenders choose to only use part of their
income to buy goods and services, the payers of
interest won't get back all the interest paid as an
income."
--------------------------------------------
Although you will be reluctant to admit it, with this
you have now effectively abandoned the argument that
interest "causes" anything. In its place you now
substitute the bankers' underconsumption thesis.
Intellectually, it is a big step forward. I'm not
being facetious.
But the underconsumption thesis in general (not just
limiting it to the bankers) is itself based upon a
rather subtle fallacy, which I'll introduce here.
I again append the flux-reflux diagram.
http://www.geocities.com/socredus/compendium/flux_reflux2.gif
If now we take the flux to represent income, and the
reflux as representing spending from income, there is
always a residuum represented by the gray shaded area.
At any point in time the statistical recipient of
income will have spent something less than the income
he has received.
-
The economy is a physical process. It takes time for
action to be accomplished.
Homework assignment: Let the flux represent the rate
of spending by the statistical entrepreneur, and the
reflux represent receipts over his sales counter.
Inasmuch as he is always receiving back less than he
is spending, how is it possible for him to record a
profit?
-
--- Per Almgren <info@nordspar.se> wrote:
Subject: The condition for interest causing
exponential debt growth
Date: Wednesday, September 28, 2005
If the lenders use all their interest and other types
of income to buy goods and services, there will be no
exponential growth of the debt in the society. In that
case all interest costs will turn back as income to
the rest of the society.
If the lenders choose to only use part of their income
to buy goods and services, the payers of interest
won't get back all the interest paid as an income.
The indebted will have the choice to ask for new loans
to be able to keep on their own consumption or
business on the same level or to cut down their other
expenses.
If they borrow, they will later on have to pay back
the loans and, during the repayment period, also to
pay interest.
Following this development, we will see an exponential
growth of debt.
If on the other hand, the borrowers choose to cut down
their expenses, this will of course mean buying less
and that will require less income for business firms
and decreasing need for employees, i.e. increasing
unemployment rates.
It can of course be argued that if you don't use all
of your income from work or allowances to buy goods
and services, there will be the same consequences with
need for new loans and/or increasing unemployment.
This is true but people who only have income from work
and/or allowances usually have substantially lower
total income than people who are in the position of
being able to lend money to others.
Therefore the main problem is the behaviour of the
lenders, do they use all of their income to buy gods
or services or do they use part of their income to
lend new loans.
Statistics does strongly point in the direction that
the more money you have, the larger part of your
income is used to lend to increase your interest
income or invest with an expectation of profit return.
So for the society, the interest income and profit on
money causes a growth of the total debt.
Per Almgren
--
__________________________________
Yahoo! Mail - PC Magazine Editors' Choice 2005
http://mail.yahoo.com
|
Part 2: Extrapolat
Reply to this message