How did the system actually function back when gold and silver served as our primary currency? Even then, interest was still charged on loans.
What were they supposed to "print" to meet rising demand? Where does new gold enter the system to allow for the repayment of debt?
It comes from new labor and increased consumption. Person A lends to Person B, who gradually repays Person A. Meanwhile, Person A spends that money with Person C, who then spends it with Person B, completing the cycle back to Person A. Money moves in a continuous loop. The credit is settled without needing to mint additional gold, leaving everyone satisfied.
The true solution to this dilemma lies in halting the printing of money altogether, rather than printing even more. That is the only way to fix the underlying issues. Anything else is merely a temporary fix that digs our hole even deeper.
If non-credit money were issued as a gift, credit wouldn't even exist. Or, if it did, it would be such an insignificant part of the system that you could practically ignore it. Why? Because nobody would bother offering credit. I know myself—I certainly won't be lending anything if it's just given away for free. Understand this: without interest, there is no credit.
Interest acts as a representation of additional labor performed over time.
At times, interest becomes unsustainable.
Consider this: if your annual labor output is $33, then the credit you take out $33 combined with your various expenses $33 creates a trap. If your productivity grows by 4% annually, but your interest rate sits at 6%, you will never pay back that debt. The debt simply grows faster than your ability to work.
If the math is different, the system functions, and you eventually settle the debt.
The current system relies on people not hoarding cash. You save in everything except currency, because saving cash pulls liquidity out of the system, which is a fundamental problem. However, depositing money in a bank isn't an issue since that capital remains within the system; the system manages this through inflation and interest paid on savings.
You are all focusing on this specific model where total debt exceeds GDP growth, making repayment impossible. Fine. In that case, let us forget about interest and simply focus on slowly repaying the principal. That scenario applies to only a handful of nations currently facing such conditions.
Look, for every single argument you try to construct to support your money-printing theory, I could find a thousand counterpoints to dismantle it at any given moment. This isn't because I claim to be an economist or some kind of expert. It is simply because your theory is riddled with holes. If we were to build a computer model to simulate your printing scheme in practice, you would see the disastrous results for yourself.
Just remember this one vital point. Money is merely paper with a bit of ink on it. No matter how much of it you print, it remains nothing more than paper. You won't suddenly have more televisions, or more iPhones, or more crops just because you printed extra cash. Therefore, you can conclude that you have contributed absolutely nothing to the economy, other than wasting vast amounts of paper and ink.
The core issue is that money is nothing more than dyed paper. It is a worthless raw material used solely to fuel fires. We assigned it value simply to facilitate easier trade. We appointed "referees" to ensure no one uses that currency to cause chaos. What has occurred is that some of those referees have overstepped their bounds for various reasons. However, that does not change the fact that money remains nothing but colored paper without intrinsic worth. Whatever you refuse to tolerate in that paper, you must ultimately renounce. Only 3% of Americans earn enough to cover all their needs because they live beyond their means. Do not attempt to tell me otherwise. No one is stopping them from moving into the woods and living in a cave with nothing. Expenses equal zero; income equals zero. Here is the simplest math, which should be clear to anyone. You would never need another single unit of currency for your "needs." Zero equals zero!
Therefore, I suggest you revise your financial model once again.
By all means, sir, I suggest you revisit the Treaty of Versailles. It seems a significant portion of that agreement has, shall we say, escaped your attention.
From the start of 1929, Germany was required to pay war reparations totaling $5 billion, with the remaining balance, to be determined later, payable over a period of 30 years.
Dear Mr. Stole, you are unfortunately failing to see the big picture, focusing instead on mere fragments. In what way did Hitler exert pressure from Germany? He did so by issuing credit money to pay off reparations from World War I, effectively exporting inflation beyond his borders. This is precisely what the USA is doing right now. We all know what happened once the world realized the truth.
The USA did not build 30% of Europe's GDP from scratch; rather, they simply restored Europe to its pre-war status. There is a massive difference between repairing what was broken and creating something entirely new. Europe possessed everything: the conditions, the experience, the workforce, the industrial mindset, the education, the tradition, the knowledge, and the technology. The war only damaged the infrastructure. I hope you will agree that raising GDP in such a manner is quite simple.
Consumers pay less while producers receive more than they do today.
You made an astute observation. But if that is the case, where does the surplus go? It goes to the entity issuing that credit money. In other words, it goes to the government. This is simply another form of taxation used to fill the federal coffers when the fiscal year winds down. Does the state know this? Certainly. Do the people know? Most likely. But will the government ever relinquish its role as guarantor? Not a chance. It would be like asking them to abolish sales tax or income tax. Impossible.
And things aren't much better in China than they are here in the USA 🙂. Just try living there and you will see 🙂. The lifestyle you enjoy is ultimately paid for by every single dollar you earn.
Fine, let this serve as a lesson to everyone. A home isn't some sacred sanctuary sent from God to provide us with peace and privacy. It is simply a collection of bricks and concrete, built by people, for people, costing an average of $750 per square foot. Don't forget you're also paying for the land underneath it.
Some things are truly priceless. For everything else, there's a Mastercard.
Let this thread serve as a lesson for anyone facing similar issues.
Just imagine the savings if they had simply paused to think before starting this thread and asking for online advice. While seeking input can be helpful, it isn't always wise to rely on internet strangers for major decisions.
I would simply remind you that according to medieval Christian philosophy and Biblical teachings, charging interest on loans was strictly forbidden. Historically, Christians did not engage in lending. Why didn't they provide credit? Because there was no incentive. If I lend you money, you might pay me back, or you might not. Even in the best-case scenario where you return everything on schedule, I still lose value due to inflation. Why would I ever lend?
For that reason, the only people providing credit were the Jewish community. They amassed wealth through this process quite ruthlessly. Ultimately, this led to a dynamic where the Jewish population lived off interest, while the Christian population worked merely to service that interest.
The solution to this predicament lies in export-surplus nations that build up massive reserves (such as China, the United Arab Emirates, or India) beginning to spend those reserves on labor from heavily indebted countries (like the USA or the European Union, including America). This shift will occur very rapidly. Our standard of living will decline slightly, while the standards of China and similar nations will rise. This is the inevitable sequence of events. There will be no systemic collapse, nor an apocalyptic uprising of the people.
I am writing this here for the seventh or eighth time. I am quite stubborn. I do not expect it to suddenly sink into your minds 😉 But then again, one can never be certain.
The current system of free trade is arguably the finest conceptual framework ever devised by man. Every individual, through their own supply and demand, influences the value of goods for others. We will likely never devise anything superior to this.
The most significant proof—which remains irrefutable even after seven hundred pages of forum posts (seven specifically dedicated to this nebulous topic)—is that this system continues to function. It has already weathered several crises identical to this one throughout history. It still works. And it will continue to work, especially as some of the major economic powers have already begun to achieve economic growth.
Honestly, I find it hard to believe you two are still debating this... If this is such a grievance for you, my only suggestion is to stop using money altogether. Just quit using it and live your life that way.
Personally, I am perfectly fine with the interest rates offered on my savings accounts. I appreciate seeing my capital grow over time without having to put in any extra manual labor. It works for me, and I have no intention of changing it. Where that money originates doesn't interest me. I certainly don't need explanations from conspiracy theorists. I simply recognize that this system has functioned this way for an incredibly long time and will continue to do so for the rest of my life. I intend to take advantage of it.
The fact that someone took out a loan they cannot repay and is now complaining that the system is impractical—when it actually functions perfectly every single day—is solely their own problem. It is time to get serious.
Only about 3% of the world's money exists as physical paper currency. Everything else is purely digital. This wealth doesn't travel in paper form; it moves through electronic transfers.
That is precisely what he ignores. He relies on a mathematical formula spanning twenty years, yet completely disregards any newly emerging values. To him, those variables equal zero. Consequently, his model fails to account for reality; according to his logic, the system should have collapsed ten years after its inception—somewhere around 5000 BC. But it didn't. It survived. Even today, it remains operational. How can he express such bewilderment that the system still functions when his own mathematics dictated its demise? We attempt to explain the discrepancies to him, but it is like talking to a brick wall. There is simply no way to make him see reason.
Regardless, he is merely one lost soul. For ages, he will continue to shout, "It should have failed!" And perhaps some people will believe him. However, practice will always dictate the truth, no matter how loudly he cries out. As for me, I am still paying my bills in US dollars, managing my savings, loans, interest rates, and inflation. Everything continues to function perfectly. No matter how much he shouts.
The reason for payment delays is simple: B owes A, C owes B, and D owes C. This isn't due to a lack of funds. It happens because A made some disastrous mistakes and now lacks liquidity. If A collapses, he might very well pull B, C, and D down with him.
Money is merely paper. It is a fictitious value we have collectively agreed to assign to specific tasks. For instance, it is understood that one hour of loading a truck is worth $8.25, even though that hour represents actual, useful labor, whereas $8.25 is just a piece of paper covered in ink. Precisely because money is a perceived value rather than an effective one, its worth is determined by the perception of the masses using it. This leads to paradoxical situations where $1 in China might buy you a home made bracelet, yet in Iran, that same dollar could land you on a gallows. It all comes down to how the mass perceives that dollar. Now that we have moved past the basics, let’s analyze the behavior of money. One observation is immediate: generally, the more money exists within the system, the less value people assign to it. It is a spontaneous reaction. Regardless of what someone declares an hour of truck loading is worth—say, $3.25—society will naturally devalue the currency if there is too much of it in circulation. Eventually, loading that truck will only be worth $8.25 per hour. No legal decrees, threats, or penalties can alter this. It is the only fixed law in this entire web of theories, and it is the one constant you can always rely on.
Consider saving. A person can save in many ways. Some choose gold, others silver, precious stones, real estate, land, stocks, funds, or bonds. However, only a small number of people save in paper. You must realize that every form of saving carries the characteristic of durability. For example, nobody saves in milk or eggs. Saving in paper isn't inherently bad, except for the fact that such paper ultimately serves only as kindling, yet those who save in it assign it a much higher value. When you own a stock, you own a piece of a company. You own a tangible share of the profits generated by the collective labor of the workers. You own something real. When you hold paper, you hold something that is effectively fuel for a fire; realistically, that is its only true utility. Everything else exists only in human minds.
As a society, we have perfected methods to track the flow of money. We monitor the movement from the Federal Reserve, through commercial banks, to the individual, and back again through taxes and consumption to the Federal Reserve and the state. But even then, it is still just the movement of paper and nothing more. Saving in this paper will eventually result in using that paper for heat, whereas saving in gold, for instance, will never lead to that. Inflation exists specifically to discourage people from hoarding this paper. It is a tool used to drive people toward other forms of saving, which is not necessarily a bad thing. On the other hand, bank interest exists to assist those who lack the foresight to know how or where to save to generate profit. Both inflation and interest rates are tools through which this system functions. They are instruments used for the common good and progress.
Theoretically, if everyone saved money by hoarding it under their mattress, there would be a shortage of cash. This wouldn't manifest as a delay in payments, but rather as a sudden spike in prices—for example, bread jumping from $1 to $2.25. That is how the system works in practice. It is not a matter of how you or I perceive it; it is simply an axiom. When supply is low, value increases, and vice versa. By the way, in practice, it will never happen that everyone hoards cash under their mattresses. Your Microsoft Excel spreadsheet is flawed precisely because it only accounts for the money currently in the system. It fails to account for newly created labor, the time factor, and so on. To me, my reasoning is perfectly clear and logical. I truly do not understand how one could get lost in this thought process. If your conclusion is wrong, it is because your premises were flawed.
It is a vital fact that money, as paper, does not possess a fixed value. In other words, it has no intrinsic value; its fictitious value is exactly what we, as a society, have assigned to it. This is the foundation for any further analysis.
Furthermore, one cannot simply compare saving in stocks to saving in cash. The very essence of saving is acknowledging that nothing is ever 100% certain. Gold kept at home can be stolen. A vault can be breached. A corporation can go bankrupt. Stocks can plummet. A nation can default. A farm could be flooded, a ship could sink, or a house could collapse. The risks are endless. And yet, you will still save. You must save. You should diversify your assets—you wouldn't put all your eggs in one basket if you were sensible—but the act of saving remains necessary. Saving cash is one thing, but owning land provides you with the actual value of soil that can produce food. Cash is merely paper that burns poorly and produces far too much smoke. If you start talking about "security" regarding savings, you should strike the word from your vocabulary immediately.
Let’s try this one more time. I didn't bother reading your previous post because you simply repeat the same nonsense over and over...
So, what exactly is money? Money serves as a medium of exchange, but it is also a specific measure of labor that someone is willing to perform in return. In essence, for one dollar, an individual is willing to provide a certain amount of work worth exactly one dollar.
Even though the total supply of money within the system is limited, the potential volume of labor available is limitless, and through that collective effort, all debts can be settled. Do you understand now? I am gradually exhausting every possible way to prove this to you. I honestly do not know how else to explain that what you are saying is complete nonsense.
Maria Thomas48, no offense, but perhaps you should take that Microsoft Excel spreadsheet somewhere else?
The Federal Reserve issues currency. You might read in the news today that the Federal Reserve deposited $300 million in earnings into the budget. Every other central bank operates the exact same way. The government then injects that money back into the economy via wages and subsidies.
Now, please tell me, which part of this is unclear to you? Some people choose to hide cash under a mattress, but if someone breaks into their house and steals it, that money returns to circulation. Others deposit money in a bank, where the bank reinvests it and pays interest, yet that money remains within the system. Your primary assumption—the very foundation of your entire argument—is a rotten plank you are stubbornly clinging to in this thread. To suggest that in a system where X amount of money is issued at Y interest rate, there is no way for that money to return. That is such nonsense; it is the fundamental error of someone without any formal training.
The situation in the USA was nothing less than a systematic dismantling of the economy at every single level. Profitable companies that served as the backbone of local employment were sold off and quite literally stripped down for scrap metal.
On the other hand, the entire world faced identical circumstances, yet nothing changed.
So, I must ask: what happened when money was printed in Germany? In the former Soviet Union? In Russia? Even in the Roman Empire? There are a billion similar examples out there...
I disagree. I understand how the system works, and quite frankly, I have no need for its assistance. For those who struggle to grasp these mechanics, however, such guidance is essential. But knowledge comes at a price. It takes a full year at a business school to truly master it. $1667The postgraduate tuition is $3,000. If someone wants to pay it, that is their prerogative. I have already explained how things work at a forum level. You seem unable to grasp the concept. Pay for your degree first. Only then can we have a conversation.
It is a clear demonstration that your argument lacks foundation. The financial system—complete with inflation and interest rates—has existed since the very invention of currency, and it hasn't collapsed yet. Therefore, one of us must be mistaken. Which one is it?
Nostradamus: Banks can be forced into losses through several methods: defaulting on debt (writing off uncollectible loans as losses), taking out loans in a currency that eventually devalues against the local currency, or even just keeping savings in a specific bank where interest payments count against them, and so on.
As you can see, there are numerous ways to drive a bank into a deficit. The system is designed around a fixed ratio of depositors to debtors. It was never intended for a scenario where everyone saves, or where everyone takes out loans simultaneously. If that happens, the entire system collapses. That is the point you seem to be missing. What happened to your friend is simply his own misfortune. It doesn't affect me, as I have conducted business profitably for years. I reinvest my profits and help others generate their own. It is a self-sustaining cycle—a perpetual motion machine governed by the laws of supply and demand. Just because you cannot grasp it does not mean it isn't working. 😉
Robert Vaughn10: I agree with your assessment, but I still believe that taking out a loan in a specific currency just because you hope you won't have to pay it back is a mistake. That applies to both individuals and the government. You see certain things, and I see them too. I agree that the dollar will drop significantly at some point. However, that remains speculation by definition. You might be right today, but tomorrow that gamble could come back to haunt you. Furthermore, if you look at current banking offerings, no major bank is approving loans in U.S. dollars right now.
Maria Thomas48: It is impossible for everyone to maintain a constant surplus, just as it is impossible for everyone to remain in a perpetual deficit. The fundamental concept is that total consumption should ideally mirror total production. This balance shifts over time. Today, China might hold a surplus while a nation like Greece runs a deficit, but in five years, those positions could easily flip. The essential point is that the net sum always equals zero. The system is designed to be self-correcting, allowing individuals to maintain their own equilibrium.
Robert Vaughn10: Your vision of the future seems entirely dependent on the inflation of the dollar. We must remember that the dollar remains the world's primary reserve currency; it carries significant weight because people believe in its value, and there is a reason for that confidence. If the major players stopped valuing the dollar, the rest would follow quickly, and the currency would become worthless. That hasn't happened yet. In my view, it would be irresponsible to base an entire government economy on the speculative gamble that the dollar will lose value. I have nothing against Suker taking out loans in dollars—in fact, I much prefer seeing him borrow in dollars rather than euros—but these are still debts that must be repaid! Let them borrow in dollars if the rates are better, but not under the assumption that inflation will magically erase the debt! Every debt eventually comes due.