tag:blogger.com,1999:blog-5157847632746829940.post1615940552192289384..comments2016-01-15T00:40:27.987-08:00Comments on Clumsy Statements: On Unpayable Interest, or: Confessions of a Monetary CrankPeter Golovatscheffhttp://www.blogger.com/profile/16845984508247222295noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5157847632746829940.post-64504909102359103742015-02-28T01:29:47.083-08:002015-02-28T01:29:47.083-08:00There's nothing bad in being confused. This is...There's nothing bad in being confused. This is what I wrote in the end of my first post:<br /><br />"Slightly confused? Out of initial confusion will emerge new understanding. I'm confused myself, but I'm working on it by unlearning and learning."<br /><br />http://clumsystatements.blogspot.com/2014/12/unlearning-money-part-1.html<br /><br />I suggest you read my first three posts. It might help, or then it might make you even more confused -- I can't give any guarantee. But you won't learn much if you're not confused first, because that confusion is what makes you search for the "truth". Many of us don't bother, so they choose to remain ignorant.<br /><br />You can find an answer to your question also in this video I found yesterday (the answer starts at 1:13:53):<br /><br />https://www.youtube.com/watch?v=d6x8RqiAqno<br /><br />Have a look and let me know if it helps? My answer is still the same: Paying interest does not "destroy" "money", so over time we can pay even 1,000,000 units of interest with only 1,000 units of total M2. But to really understand how this works, you probably must study the monetary system a bit more. Good luck! :-)Peter Golovatscheffhttps://www.blogger.com/profile/16845984508247222295noreply@blogger.comtag:blogger.com,1999:blog-5157847632746829940.post-17820988495137221432015-02-25T09:49:14.425-08:002015-02-25T09:49:14.425-08:00Hi, thanks for answer, but i still don't get i...Hi, thanks for answer, but i still don't get it..<br /><br />I did ask the SSB about how much of K2 is money producing bank loans, but they could not tell..<br /><br />If we fokus on the money producing bank loans.<br />If have loan of 1000 units money producing. Next year i owe 1010 units. (if i fail to pay the interest..) . Do the bank have different accounting on money producing and non producing interests. Outside the bank it is only 1000 units of M2, or do the M2 increase by the interests? <br /><br />The forwarding of loan, is that what is called "fractional banking"?<br />The book "Where does money come from" says ther is not such a thing, and they don't say a word about the interests, not in the you tube version anyway ( SSB recomended me that book/youtube)<br /><br />i am soooo confused..!-)Arild Inge Franzenhttps://www.blogger.com/profile/12847577829171881648noreply@blogger.comtag:blogger.com,1999:blog-5157847632746829940.post-73582360810132251202015-02-25T03:33:06.862-08:002015-02-25T03:33:06.862-08:00Hi Arild!
Thanks for the question. I think you ne...Hi Arild!<br /><br />Thanks for the question. I think you need to focus on how "money" circulates in the economy. As you correctly point out, M2 does not equal the amount of debt in the economy. But M2 can be used to pay back almost any debt (debt owed to a friend, for instance). Only in the case of bank debt, like a mortgage, M2 (in this case, a deposit) gets "destroyed" as the debt is repaid. In all cases of "non-bank debt" (corporate bonds, etc), M2 continues to circulate in the economy -- even when it is used to pay back this non-bank debt.<br /><br />When M2 is used to pay interest on a loan, it is never destroyed. So 100 units of M2 can be used to pay interest worth 1000 units (100 units at a time, ten times).<br /><br />So, in theory you could repay all debt, with interest, by using only 1 unit of M2. We have a lot of flexibility in these matters, as "money" is never what is ultimately owed. Ultimately, goods and services are what is owed. That's why you can repay your creditor -- if you run out of "money" -- by returning the car (in case of a car loan), or by working for her.Peter Golovatscheffhttps://www.blogger.com/profile/16845984508247222295noreply@blogger.comtag:blogger.com,1999:blog-5157847632746829940.post-56472003941649661882015-02-23T14:37:09.427-08:002015-02-23T14:37:09.427-08:00Hi. A question on your statement " If, hypoth...Hi. A question on your statement " If, hypothetically, all debts were repaid, there would be no interest to pay." I did check the SSB i Norway, and it reads that there is about two times more debt K2, than amount of money M2. And the difference is increasing with almost the same rate at the interest rate?. So how can you "repay" all debt? I still have not got any assuring answer about where the interest come from?Arild Inge Franzenhttps://www.blogger.com/profile/12847577829171881648noreply@blogger.com