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Ammar Bilajac

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If the interest is increaseing the money supply, which is decreasing the value of money, where will it end??

With more and more credit, more and more people have to give money for credit.
But the one who lend you 100 $ wants that you give him 110$, where does that 10 $ come from?

Topics: economy interest
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    Gail . 50+

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    Oct 4 2012: The interest is never invented into existence. When there is a money shortage (IN PART because of interest payments that are due), then more money is invented into existence for those other alleged issues.

    Where will it end? It will end when the US govn't (or a major player in the corrupt capitalist model that is the global economy) can no longer afford to pay its interest payments, and other countries will not be able to pay their own interest obligations if they support the broken piece of the global economy (like Greece).

    There are two ways for this to end.

    1) Spiraling inflation in order to devalue the value of the debt (as happened after Reagan spiraled the debt out of control with his trickle-down theories). Then, when people get angry enough, there will be an attempt to stabilize it. People will suddenly be making anywhere from 20 to 80 times as much as they were, and their houses are worth more as well - certainly more than people ow on them - so they will "feel" wealthier, but the problem will not have been solved. The can will have just been kicked down the road. The current economic model is unsustainable, so it will collapse in our lifetime or in the lifetimes of our children.

    2) Humpty Dumpty falls of the wall.
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    Iulian Sociale Ingegnere

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    Oct 4 2012: Read also this becouse with my idea the name of the currency does not have any importance but the value of the community effort that use it to circulate that currency. So the currency can be also just of group of 10 people that work hard then they unite the effort with other 15 that also have another value of their effort so we in some way measure the value of our effort as the others see it and apreciate it becouse they need it and use it. http://www.ted.com/conversations/14070/goods_and_services_exchange_wi.html
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    Robert Winner 50+

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    Oct 3 2012: There is a conversation on QE3 that followed the conversation on QE2 by Pat Gilbert. Some of this may help to understand. I have struggled to keep up but it was a real education to me.

    All the best. Bob.
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    Krisztián Pintér 200+

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    TED Translator
    Oct 3 2012: if. but it is not. interest rate has nothing to do with increasing money supply.

    in you example, the answer is strikingly and painfully obvious: my earnings. i need to give up that much consumption, and work that much more.
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      Ammar Bilajac

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      Oct 3 2012: when banks lend money they increase the money that is circulating, its called the scondary emission of money...
      I am sorry my english isnt that good...
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        Krisztián Pintér 200+

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        TED Translator
        Oct 3 2012: when banks lend more money than the deposits they have. but that is not related to interest rate. that money multiplication would happen if there were no interest rate. this is related to fractional reserve.
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    Xavier Belvemont 30+

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    Oct 3 2012: If in America, the money is printed by the Federal reserve out of thin air, which diminishes the currencies value.

    I'm not sure what the method is in Bosnia is though.
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