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How Can The Debt Be Repaid......


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If economics is a science it can answer this question.

If I am the central bank and I control all money, and I lend person A £1m and Person B £1m and charge them 5% interest a year how do person A and B get the £50,000 pound to pay me the interest?

Superb illustration which really made the penny drop. I have been looking into all this banking hocus pocus and how the whole monetary system is comprised of 'money' that doesn't actually exist, how banks need to keep creating money etc. This example really made it clear why that is so.

I'd be interested in Injun's technique as to how he got off debt free as I'm sure we all are. My only doubt is that if it is true, then why is he continually not just getting loans and then 'wiping' them from the system? I could maybe understand it if you could only do it once, after which no-one will want to lend to you. Although I guess bank B doesn't have to know how you f**ked over bank A.

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Superb illustration which really made the penny drop. I have been looking into all this banking hocus pocus and how the whole monetary system is comprised of 'money' that doesn't actually exist, how banks need to keep creating money etc. This example really made it clear why that is so.

I'd be interested in Injun's technique as to how he got off debt free as I'm sure we all are. My only doubt is that if it is true, then why is he continually not just getting loans and then 'wiping' them from the system? I could maybe understand it if you could only do it once, after which no-one will want to lend to you. Although I guess bank B doesn't have to know how you f**ked over bank A.

Ethics.

The same fury that freed me from the con won't allow me to go back to deal with them again. I don't even have a bank account now.

The simplest thing to do is to demand equality of proof.

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Superb illustration which really made the penny drop. I have been looking into all this banking hocus pocus and how the whole monetary system is comprised of 'money' that doesn't actually exist, how banks need to keep creating money etc. This example really made it clear why that is so.

I'd be interested in Injun's technique as to how he got off debt free as I'm sure we all are. My only doubt is that if it is true, then why is he continually not just getting loans and then 'wiping' them from the system? I could maybe understand it if you could only do it once, after which no-one will want to lend to you. Although I guess bank B doesn't have to know how you f**ked over bank A.

This has been puzzling me for a long time, the question clearly has no logic but yet this is how it works.

I keep trying to find time to ask this of Mystic Merv and demand an answer under the freedom of information Act just to see what he comes up to get out of answering this question.

What we need is someone to do this on question time and see how the politicians react.

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  • 1 month later...
:lol:

I was more thinking that you could just demonstrate to a court that repayment was impossible and BINGO, all debts canclled.

Can't contract to perform the impossible, see?

I think we will see and are seeing exactly that solution... apart from the usual IVA's , voluntary agreements, banruptcies.... the latest "out" is slightly more dastardly... under the CCA unsecured lenders issue loans either personally or for cars or white goods etc... whats now happening is that lawyers are challenging these agreements for all sorts of reasons from APR minor mistakes to wrongly selling insurance etc.... currently 85% of cases are meeting with success apparently... the result.. if you have £10k car loan and the bank is proven to be in breach.. you keep the car, the bank has to write off the debt and pssibly refund past payments to you and they then have to pay the lawyers fees.... don't need too many of these to happen to put some big pressure on.. its potentially a far bigger risk for the banks than the whole current account charges thing.

As you say cancelling the debts is how it happens and if the recession is deep enough then thats what will happen... although quite what financial system we would have as a result I don't know.

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Our debt system relies on ever-increasing amounts of debt/money to be borrowed into existence in order to pay off the debt that is currently owed. Even a fool can see it's unsustainable. We'll probably be reaching the mathematical limits of viability of such a system round about NOW.

Since when has debt been increasing forever in relation to output? Maybe in Italy but not across the globe.

For those who are saying "how can we pay back the money when the banks have all of the money". Money is a medium of exchange. The resources we (companies, workers) have are our physical and human capital, as well as land, natural resources etc. You use that to exchange for money to repay the debt.

Yes this relies on the banks circulating money but they are....have you seen banks calling in all of their agreements with companies and individuals? No. They are just reducing the amount of money that is circulating. That has repercussions for sure, no argument there but it will eventually stabilise, through increased saving and possibly some nasty inflation.

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  • 1 month later...
For modern times, the most enduring legacy of Magna Carta is considered the right of habeas corpus. This right arises from what are now known as clauses 36, 38, 39, and 40 of the 1215 Magna Carta.

As the most recent version, it is the 1297 Charter which remains in legal force in England and Wales. Using the clauses in the 1297 charter (the content and numbering are somewhat different from the 1215 Charter): Clause 1 guarantees the freedom of the English Church. Although this originally meant freedom from the King, later in history it was used for different purposes (see below). Clause 9 guarantees the “ancient liberties” of the City of London. Clause 29 guarantees a right to due process.

* I. FIRST, We have granted to God, and by this our present Charter have confirmed, for Us and our Heirs for ever, that the Church of England shall be free, and shall have all her whole Rights and Liberties inviolable. We have granted also, and given to all the Freemen of our Realm, for Us and our Heirs for ever, these Liberties under-written, to have and to hold to them and their Heirs, of Us and our Heirs for ever.

* IX. THE City of London shall have all the old Liberties and Customs which it hath been used to have. Moreover We will and grant, that all other Cities, Boroughs, Towns, and the Barons of the Five Ports, and all other Ports, shall have all their Liberties and free Customs.

* XXIX. NO Freeman shall be taken or imprisoned, or be disseised of his Freehold, or Liberties, or free Customs, or be outlawed, or exiled, or any other wise destroyed; nor will We not pass upon him, nor condemn him, but by lawful judgment of his Peers, or by the Law of the Land. We will sell to no man, we will not deny or defer to any man either Justice or Right.[2]

Freeman and a Citizen are not the same . One has RIGHTS and the other has BENEFITS & PRIVILEDGES .

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  • 2 weeks later...

In reply to the OP, I'll have a go.

The obvious answer is it can't but, perhaps most people don't realise that from when a bank or network of banks start it is impossible to pay off all the loans because they take a fraction of the repayments as interest, hence less money loaned out (in circulation) than is owed back.

Money you receive has always been loaned out to someone else perhaps by another bank.

Hence the systems need exponential growth to keep paying repayments+interest. Exponential growth is fine if you have limitless space and natural resources, but eventually something starts to hit against the growth (eg oil or energy supply), or we realise that continuing consuming in this way we will all die very soon and limit something or other.

Economists assume infinite growth is possible through improvements in technology, but all Engineers know that there is a limit to the efficiency you get from any system and that efficiency improvements reduce with increasing efforts at you get closer to 100% efficiency. Sure there can be some step changes but technology does not improve exponentially (except processor speeds, and that has to be limited at some point), big stuff like pulling ore from the ground or refining, building products isn't really going to get much more efficient than it is now, and as a natural resource it is not inexhaustible, Fusion power might allow plentyfull power but it seems 1 or 2 elements of it require limited natural resources. The point is we are already over extended, if everyone on the planet was to consume as we do in the UK we would need 3 planets (the US requires 5). As developing nations catch up with us, having found the magic of invented money we will be in real trouble, we can't fault them for it, we encouraged them as we know money makes people happy!

Until we can find another suitable planet we need to limit growth to within the confines of this one and our technology. The current economic system does not support that. We should not borrow from the future, we are basically taking natural resources from our children.

Perhaps it is an abuse of the system when banks get greedy, but its just too inherent in the system, growth has become a magic investor word. We don't need growth (it does provide security against invaders, but insecurity against environmental damage) we need food and shelter and something do to stop us fighting.

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I should also add that the other thing that inhibits growth is borrowing limits on Banks, the thing that is happening now. The system that requires exponential growth and more and more borrowing is limited in itself. Eventually everyone is just paying interest on loans and can't pay anymore.

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Surely as people go bankrupt and can’t pay back their debts this helps the rest of us meet our interest payments. I think differently now about people who run up stupid debt buying car and holiday on credit cards and then going bust.

Imagine there was a tiger running after all of us and it killed the person that ran the slowest. We could all stand around after he had been killed and laugh at how slow this guy was or we could thank god that that there are all these slow people out there other wise it could have been us.

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Surely as people go bankrupt and can’t pay back their debts this helps the rest of us meet our interest payments. I think differently now about people who run up stupid debt buying car and holiday on credit cards and then going bust.

Imagine there was a tiger running after all of us and it killed the person that ran the slowest. We could all stand around after he had been killed and laugh at how slow this guy was or we could thank god that that there are all these slow people out there other wise it could have been us.

I think the trouble is that then the tiger is bigger, faster and stronger after having eaten.

As we can see from the current predicament, eventually almost the whole hroup is consumed and there is just one big fat happy tiger left. Who then proceeds to starve to death!

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I can not believe people find it so hard to understand what Injin is saying here.

I am not financially savvy by any means, but if you put logic into play here, it all becomes clear.

If the banks dont give you cash (legal tender) how can they expect you to pay it back? If my friend asks me to borrow a pound, and i agree but give him a picture of a pound, how can I then ask him to give me back a real pound?

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I can not believe people find it so hard to understand what Injin is saying here.

I am not financially savvy by any means, but if you put logic into play here, it all becomes clear.

If the banks dont give you cash (legal tender) how can they expect you to pay it back? If my friend asks me to borrow a pound, and i agree but give him a picture of a pound, how can I then ask him to give me back a real pound?

When was the last time you paid a bill, cash?

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If economics is a science it can answer this question.

If I am the central bank and I control all money, and I lend person A £1m and Person B £1m and charge them 5% interest a year how do person A and B get the £50,000 pound to pay me the interest?

If I only accpet my currency £ where does the money come from?

Now person A may do person B a job and charge them £50,000 they can then pay me all my money back plus interest. Person B now only has £950,000 and is £100,000 short?

The only possible way Person B can pay the bank back is if I increase the money supply and may lend a Person C who's just turned up £1m. Person B then does work for Person C and charges £100,000. Person C is now £150,000 short of the money they owe the central bank.

It appears my thoughts are not alone on how this works.

So it appears that the only logical way the central bank can get there money back is to continually create new money and lend it out to the original lenders and ever new lenders.

However the central bank rates is currently 5% and money supply has been growing at 10%+ so where has this money been going???

It appears to be a circular system which needs the banks to continually increase the money supply and create new lending to get it's money back from past lending.

Has money supply growth ever been zero?

You're ignoring productivity. Or, more precisely, you're ignoring the effect of any profits in energy.

The reason we're in such a mess is simply because the money supply expanded to a point where there won't be enough productivity within a suitable time horizon to pay it back. The problem is the rate and degree of expansion, not the expansion itself - which is a natural consequence of improvement in efficiency and productivity.

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  • 2 weeks later...
If economics is a science it can answer this question.

If I am the central bank and I control all money, and I lend person A £1m and Person B £1m and charge them 5% interest a year how do person A and B get the £50,000 pound to pay me the interest?

If I only accpet my currency £ where does the money come from?

Now person A may do person B a job and charge them £50,000 they can then pay me all my money back plus interest. Person B now only has £950,000 and is £100,000 short?

The only possible way Person B can pay the bank back is if I increase the money supply and may lend a Person C who's just turned up £1m. Person B then does work for Person C and charges £100,000. Person C is now £150,000 short of the money they owe the central bank.

It appears my thoughts are not alone on how this works.

So it appears that the only logical way the central bank can get there money back is to continually create new money and lend it out to the original lenders and ever new lenders.

However the central bank rates is currently 5% and money supply has been growing at 10%+ so where has this money been going???

It appears to be a circular system which needs the banks to continually increase the money supply and create new lending to get it's money back from past lending.

Has money supply growth ever been zero?

I think we need to be a little bit careful here when discussing interest payments. It's something that troubled me when I first watched the otherwise excellent 'money as debt' videos on youtube. The problem I have is that it is wrong to view interest payments + capital repayment as money coming out of a pool of just capital, This is because interest payments are part of the circulation of capital - you need to consider these payments as re-entering the economy (e.g. as employee wages, shareholder profits etc) as well as being payed by debtors. The total money stock does not have to grow to enable banks to charge interest.

Inflation can continue for as long as the money supply is increased faster than it is repaid or defaulted on. All the inflation since WWII has happened because debt has not, on balance, been repaid but has instead increased to the point where about 97% of the money stock is debt-based. It's a sobering thought that if all debt was repaid house prices would drop to an average of little more than £5000. I'd hazard that's lower than even the most bearish prognosticators would assume possible!

UM

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