At the edge of the abyss - When everything is never enough.

[bpr]

Re: At the edge of the abyss - When everything is never enough.

Why the need for analogies and examples, when the system itself is the best example?

I'm tired of metaphors, myself.

But your original post here doesn't get at the specifics that you mention with the 12-pack metphor.

I think what you're arguing here is that usury has nothing to do with the interest rate, as it is typically defined, but rather the (in)ability of the borrower to pay.

In this context, an entire system of credit could be considered usurious, since the amount of systemic credit exceeds the ability to pay by a factor greater than... I'm losing myself here, but there is the possibility that a single dollar by virtue of changing hands a number of times will pay off a number of debts, but that requires money moving and not being saved on a mass scale, which is fueled by inflation...

Lost again.

[Sharky]

Re: At the edge of the abyss - When everything is never enough.

What you do not see, are those that are forced into bankruptcy because they could not meet their obligations when they were competing against you for those currency units you used to make good on your contract.

Why would competition alone result in some people going into bankruptcy?

About your second point, everyone is a victim because they are paying interest on the use of the currency when they do not even know or agreed to pay such interest on the use of it.

Huh?

[Sapiens]

Re: At the edge of the abyss - When everything is never enough.

Why would competition alone result in some people going into bankruptcy?

It is not the competition that causes the bankruptcies, it is the fact that when credit is extended by a commercial bank monetary units are created and when you pay back the principal, monetary units are extinguished. In effect there is always a deficit of monetary units, that means all economic agents are forced to compete for a decreasing number of monetary unit, or in other words, they are forced to trade more wealth for less monetary units.

Huh?

See "Money as debt" http://www.itulip.com/forums/showthr...ght=debt+money

[Sapiens]

Re: At the edge of the abyss - When everything is never enough.

In this context, an entire system of credit could be considered usurious, since the amount of systemic credit exceeds the ability to pay by a factor greater than...

Correct and you are not lost, you are on the right track.

I think what you're arguing here is that usury has nothing to do with the interest rate, as it is typically defined, but rather the (in)ability of the borrower to pay.

You got it. The borrower cannot pay because the issuer of the currency has taken monetary units out of circulation.

[Rajiv]

Re: At the edge of the abyss - When everything is never enough.

The Following article by Nikki Alexander is quite instructive

Restoring Our Financial Sovereignty: A New Monetary System

Prologue

When Benjamin Franklin was called before the British Parliament in 1757 and asked to account for the prosperity in the American colonies. He replied, “That is simple. In the colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one.”

It was the struggle for financial sovereignty that precipitated the American Revolution when the (Rothschild) Bank of England forced the colonies to give up their Scrip and intense poverty followed.

That war never ended.

Throughout their political lives Thomas Jefferson, James Madison and Andrew Jackson fought off the European bankers who intermittently controlled the nation’s money supply through privately-owned banks. When Abraham Lincoln issued ‘greenbacks’ that deprived private bankers of their monopoly control of the nation’s money supply he was assassinated. The European bankers battled for more than a century to establish a private central bank in the United States with the exclusive right to print their own paper notes and exchange them for government debt. They succeeded in 1913 with The Federal Reserve Act, a coup that authorized a private cartel to create money out of nothing, lend it to the government with interest and control the national money supply, expanding or contracting it at will. Representative Charles Lindbergh called the Act “the worst legislative crime of the ages.” Fifty years later, President John F. Kennedy defied the central bankers when he issued debt-free Treasury Notes. He too was assassinated.

The Systemic Usury Parasite

Why rob just one bank when you can rob a whole nation? And why rob just one country when you can rob them all?

In 1913 our sovereign authority to create interest-free money was unconstitutionally transferred to a transnational private banking cartel that has systemically infected our economy with a staggering national debt in the tens of trillions of dollars. Eighty-five cents of every dollar is now consumed as “interest” by the systemic usury parasite, draining its host of vital resources and collapsing our economy in bankruptcy. Ours is not the only nation to succumb.
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[Sharky]

Re: At the edge of the abyss - When everything is never enough.

It is not the competition that causes the bankruptcies, it is the fact that when credit is extended by a commercial bank monetary units are created and when you pay back the principal, monetary units are extinguished. In effect there is always a deficit of monetary units, that means all economic agents are forced to compete for a decreasing number of monetary unit, or in other words, they are forced to trade more wealth for less monetary units.

I don't agree with that. The idea that that money created through debt can't ever be completely paid back is flawed and incorrect -- and easily demonstrated to be so.

See "Money as debt"

I understand the process of money creation and destruction by both the Fed and the banking system in great detail. The Money as Debt video, though widely circulated, is full of inaccuracies and hyperbole, as shown in the excellent post by D-Mack. The solutions it proposes, in particular, would be a disaster.

[Sapiens]

Re: At the edge of the abyss - When everything is never enough.

I don't agree with that. The idea that that money created through debt can't ever be completely paid back is flawed and incorrect -- and easily demonstrated to be so.

Since it is so easy, please show us.

I understand the process of money creation and destruction by both the Fed and the banking system in great detail.

If that is the case, on which side are you? Are you a rapacious Usurer that can never get enough to the point of self-destruction?

[Sapiens]

Re: At the edge of the abyss - When everything is never enough.

A most excellent article Rajiv. As always, thanks for sharing.

[Sharky]

Re: At the edge of the abyss - When everything is never enough.

Since it is so easy, please show us.

1. Joe deposits $1000 in a bank.
2. Bob gets a loan from the bank for $900 at 10% interest. The bank funds the loan by creating $900 in new money and crediting it to Bob's account.
3. Bob writes a check to Mary for $810 to buy a producing apple orchard from her. She deposits the check in the same bank.
4. Interest on loans is paid before principal, so Bob uses the remaining $90 to pay the interest on his loan to the bank.
5. Bob harvests a bunch of apples and sells them back to Mary for the same $810 he paid her.
6. Bob sells more apples to the bank for $90.
7. Bob repays the principal on his loan with $810 + $90 = $900.
8. The bank destroys the $900 that it had previously created for the loan.

We're back to where we started. Joe still has his original $1000. Bob now owns an orchard, Mary has traded her orchard for a bunch of apples (the fruit of Bob's labor), and the bank has a few apples too, as (indirect) payment for their role in facilitating the transaction.

The big key here is that money circulates. It can be used more than once. The same money used to pay the interest on the loan was also used by the bank to buy apples.

If that is the case, on which side are you? Are you a rapacious Usurer that can never get enough to the point of self-destruction?

Rapacious? No, I don't think so.

I think the Fed and Fractional Reserve Banking are fraudulent, but not because they charge interest. They are fraudulent because (1) they don't fully disclose to their customers what they do, and (2) they intermingle credit money with reserve money, treating them as the same thing, when they are in fact very different.

I'm also a believer in the reality of compound interest and of allowing failure in the market. Lending money to pay interest is not sustainable, due to compounding. Lenders that make that mistake should be allowed to fail, to discourage others from both following in their footsteps and from doing business with lenders who follow similar policies.

[Sapiens]

Re: At the edge of the abyss - When everything is never enough.

Sharky,

I have been tied up in negotiations and have not been able to respond to your post.

But as a preliminary, I have some questions:

1. Joe deposits $1000 in a bank.

Where does that $1000 Joe deposits comes from? How were those $1000 originated?

2. Bob gets a loan from the bank for $900 at 10% interest. The bank funds the loan by creating $900 in new money and crediting it to Bob's account.

Where is the interest coming from? If the bank creates $900 and the loan carries a 10% interest rate, where is the $90 in interest going to come from? $900 + 10% = $990...

3. Bob writes a check to Mary for $810 to buy a producing apple orchard from her. She deposits the check in the same bank.


4. Interest on loans is paid before principal, so Bob uses the remaining $90 to pay the interest on his loan to the bank.

So this means Bob must keep rolling his loan right? What if the bank does not re-new the loan? Isn't Bob then at the mercy of the bank?

5. Bob harvests a bunch of apples and sells them back to Mary for the same $810 he paid her.

So now Mary has the apples but no money, she then must sell the apples or apple product and make a profit, but where is the money going to come from?

6. Bob sells more apples to the bank for $90.

Sure, bankers love apples. But what happens if they are only willing to buy $89.99 in apples?

7. Bob repays the principal on his loan with $810 + $90 = $900.



8. The bank destroys the $900 that it had previously created for the loan.

Why did they have to create the original $900 in the first place if Joe has deposited $1000?

We're back to where we started. Joe still has his original $1000. Bob now owns an orchard, Mary has traded her orchard for a bunch of apples (the fruit of Bob's labor), and the bank has a few apples too, as (indirect) payment for their role in facilitating the transaction.

The big key here is that money circulates. It can be used more than once. The same money used to pay the interest on the loan was also used by the bank to buy apples.

What you describe is nothing more than a simple variation of the present Usurious system…

[Sharky]

Re: At the edge of the abyss - When everything is never enough.

Where does that $1000 Joe deposits comes from? How were those $1000 originated?

In the micro sense, the original $1000 might have come by transferring it from another bank. In the macro sense, it was originally created by the Fed, as a result of their buying Treasury securities.

Where is the interest coming from? If the bank creates $900 and the loan carries a 10% interest rate, where is the $90 in interest going to come from? $900 + 10% = $990..

It's explained in the example. The interest comes from using the same money more than once.

So this means Bob must keep rolling his loan right? What if the bank does not re-new the loan? Isn't Bob then at the mercy of the bank?

No rolling is required. The example shows just a single loan. It doesn't have to be renewed in order to be paid off.

So now Mary has the apples but no money, she then must sell the apples or apple product and make a profit, but where is the money going to come from?

Well, of course she doesn't have to sell them, or even to sell them for money -- could be barter. But if she did want to sell them, then anyone who had money could buy them. If someone wanted to buy them who didn't have money, then they might be able to go to the bank and arrange a loan.

Sure, bankers love apples. But what happens if they are only willing to buy $89.99 in apples?

You could come up with any number of what-ifs. The point of the example was to show that it's possible for the interest to paid off in a closed system.

Why did they have to create the original $900 in the first place if Joe has deposited $1000?

Because that's the way fractional reserve banking works.

BTW, in case it's not clear, I think fractional reserve banking and the Fed are the problem -- but not interest by itself.

[Sapiens]

Re: At the edge of the abyss - When everything is never enough.

In the micro sense, the original $1000 might have come by transferring it from another bank. In the macro sense, it was originally created by the Fed, as a result of their buying Treasury securities.

I have an anecdote to share with you.

This past weekend, I had the good fortune to be invited to a dinner party, where the guest of honor was a banker from Spain. His family has been in banking for over 500 years, or so he says.

Well, to make a long story short, the topic of conversation turned to the financial crisis. After much talk and debate about the root causes of the matter, the host, turned to me and asked my opinion as to what I believed what the root cause of the financial crisis. I simply replied that it was usury. The whole ensemble of people present grew silent, and after what seemed an eternity, the host simply replied, “well, yes, you are quite correct.” Then, the host with a somber look and a wry smile said, “enough of this dreadful subject, let’s have dessert.”

Moments later, as I was walking around the luscious garden enjoying a fine tobacco, the Spanish banker approached me and engaged me in conversation. He wanted to know what was my opinion regarding the barbarous relic, that is to say, what was my opinion about Gold. “There is not much to say about it,” I replied, “other than to hold enough of it to rebuild if the system collapses.” I said. He laughed and said he found me an optimist chap. Then he proceed to tell me a story about Gold and Usury, that being obvious, I had not really thought about it, nor put it together in my head; he told me one of the major accomplishments of the ancient bankers was to divorce the Church’s doctrine against usury from Gold. Not quite comprehending what he meant, I asked him to elaborate, well, he did indulge me and proceeded to explain that the Church knew full well that usury is always in effect when a Gold loan and its interest were due in Gold, but that the clergy would look the other way as long as they got a cut of the action. I laughed and said that who could blame them, since once you have much, nothing is ever enough. He looked at me surprised and said that he has never heard someone say such truth out loud. The point of the story is that, as in your first instance above, we must look as to how the first monetary unit comes into existence, and if its inception is usurious, then any future transaction stemming from it will be tainted with usury.