What Could Go Wrong?
(media.greatawakening.win)
You're viewing a single comment thread. View all comments, or full comment thread.
Comments (43)
sorted by:
So how do you build a billion dollar factory without credit? And where do you get the credit if there's no magic fiction money?
How do you pay for something with something that you do not have?
Do you not understand that fractional reserve lending is lending more than you have? As in, I have $10, I loan $100, charge say 8% interest, then you have to pay me $108. How does that increase material wealth? How does that increase the yield of crops? How does that increase the materials that can be mined?
You don't need to LIE about what you have to make that "billion dollar factory". If you think that lying about how much wealth actually existed by fabricating "magic fiction money" was the only way to make that "billion dollar" factory that got made then you are actually mistaken about it costing a "billion dollars". The materials existed, workers worked to provide them, the workers were fed, clothed, housed etc. and all of that wasn't caused by a printing press.
To help you understand further, remember that currency represents wealth. So for example if the population suddenly exploded and we had more people making more things of value, THAT is when more currency should be created. Currency facilitates trade of wealth.
If you're trying to trade wealth that doesn't exist then you're committing fraud. Inflation is creating currency that represents nothing. Fractional reserve lending creates that inflation by making you pay the lender money that the lender never earned.
Do you see why this is dangerous? Why it is only productive for the lender and detrimental to the borrower? If not then I apologize I couldn't make it more clear, I tried to type this a little at a time while at work.
I don't disagree with you about the fractional reserve lending being a kind of legalized fraud, but I don't think you really answered the question about how you build the billion dollar factory without it. The workers building that factory need to be paid now. They can't wait for the factory to be completed and generating profit to get paid. Yes, the workers were fed clothed and housed by a printing press, because that press gave them access to the future money that will be generated by the completed factory. The fractional reserve system gives people access to the wealth of the future now. When it's used effectively it enables rapid economic growth by facilitating the development of large capital intensive projects.
I will tell you one way that these large projects get built without credit. It's by saving for a really long time. That's how some medieval cathedrals got built. They didn't have the ability to borrow a billion ducats to hire workers, so they used what they had over a long period of time. Literally hundreds of years in some cases to complete these structures. We can't take hundreds of years to build a factory to build cars.
So unless you have an alternative to this system of legalized fraud, we're kind of stuck. Unless you're willing to return to a kind of medieval subsistence lifestyle. This system of credit enabled the modern world.
No you're completely wrong about the fractional reserve system being the thing that provides access to the wealth. ANYTHING can be used as currency so long as everyone agrees on what. The British used to use polished sticks for example. Our government can and has issued currency that it regulated itself according to how much people needed in order to facilitate the trade that needed to be facilitated. There was no FRL necessary at all. The problem we have now is that we are using a currency that does not represent wealth because you are forced to pay back more than what they actually had that they could give you in the first place. You are actually giving them most of your wealth doing this in return for nothing. Seriously, how does you paying me $108 in return for the $10 that I was actually honestly able to give you in the first place help anyone other than me in any situation?
All of that stuff that was built could have been built exactly the same using currency issued by our own government instead of by the private Fed. Look into why the British forced the colonies to abandon colonial script by law. Look what happened and then look what the colonies did about it.
Actually the more I think about it the more I realize that you are arguing in bad faith. You really think that we MUST allow fraud in order for us to agree on what to trade with? On what a promise of value is? You're out of your mind.
I don't see why you're being rude. I'm not arguing in bad faith. It's a complicated subject. At least I think it's a complicated subject. Maybe you aren't thinking deeply enough about the implications.
Money should represent a store of value. Like storing extra rice for the winter. But when we want to use money to fund large projects we find there isn't enough of that stored rice to cover all the demands for credit. So either we have a credit crunch which constrains economic growth, or some entity, be it government or banks creates fictitious money not based on real stored value in order to facilitate the economic growth.
You say, "there was no FRL necessary at all" when the government issued their own currency rather than borrow it from a fed bank. And yet the history shows that those colonial scrips issued during the revolutionary era all devalued into worthlessness because the government issued too much of it to pay for their debts. There was no real stored value, no rice in a granary, backing up that paper. It was fictitious money used to facilitate production of goods needed to wage war.
So why is this government money printing substantially different from a fed printing and loaning the fictitious money to a government?
I don't think I have an answer to this problem. I tend to think all money should be based on a tangible asset so that it can be a reliable store of value. I like to think that when somebody works hard and sets aside part of their labor for future needs it should preserve its value, like gold bars in a vault. The idea that someone can eliminate the value of that stored labor at the stroke of a pen is odious and smells like theft. But that concept of money seems to constrain the availability of credit and thus slow down economic growth.
I don't find your assertion that this ceases to be a problem by eliminating the fed and FRL to be persuasive. I think you're just ignoring the issue.