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The Problem is not Debt, it’s Interest (with Video!)

by on August 25, 2012

How do we know this?

Consider a mortgage. We borrow $200k, and after 30 years we will have paid about $500k. So we pay $300 thousand dollars interest over the loan.

What would happen with our purchasing power, if we only needed to repay the principal? It would mean we would have 10.000 per year more purchasing power during the 30 years we repay the mortgage.

Our credit would greatly improve, because our liabilities would be much smaller.

Interest is paid to those who have money, and paid by those who don’t, and therefore need to borrow.

Interest is therefore a wealth transfer from poor to rich. Margrit Kennedy, a German monetarist, has quantified this wealth transfer in Germany. Her conclusions: the 80% poorest Germans pay 1 billion euros per day (365 billion per year) in interest to the richest 10%. The next richest 10% pay about as much interest as they receive.

Also, with in the 10% brackets the same wealth transfer is happening: so the poorest 8% of the richest 10% pay interest to the richest 1%.

It stands to reason that the situation is more or less the same everywhere. This means, that the poorest 80% Americans pay about 1,5 trillion dollars per year to the richest 10 percent.

This is the key driver centralizing wealth in the hands of the plutocracy.

Another problem with interest is, that it is not transparent who pays what. The strange thing is, that even if you don’t have any debts at all, you will still lose up to 45% of your disposable income through interest.
Producers incur ‘capital costs’. They pass these costs on to their customers. The amount of interest they pay on the loans to finance their production differs per sector. But it transpires that on average 45% of the prices we pay can be related to cost for capital.

Now, back to the debt.

Is it reasonable that one should be able to get a mortgage? Is their something intrinsically wrong with the debt?

It is probably quite useful for the large majority of the people to be able to get a mortgage. Most people would not be able to buy their own homes if they were not able to go into debt.

Another important aspect is, that in the case of a mortgage the creditor incurs no risk at all: he has the house as collateral.

And who is the creditor? In most cases a bank. A bank basically is a credit facility. However, the bank has made us believe that it is their credit, that we are borrowing their money.

This is not the case. Credit is the result of collateral and future income. A person has about 30 to 40 productive years and it that timespan an average American will make about 1 or 2 million dollars.
This future income is what makes the bank provide the credit.

But this future income is not the Bank’s, it’s the individual’s income. It is therefore their credit.

So banks capitalize the credit of the population.

We know that in the current construct all this interest is being raked in by the banks by creating the money at the time the money is loaned out. Through Fractional Reserve Banking.

We consider it unfair that the bank has the right to create money. Therefore a full reserve gold standard is propagated. Not only taking away the iniquity of money creation, but also the nasty habits of banks going broke by overleveraging themselves.

But if we take out a mortgage in a full reserve gold bank, we would still pay 500k for a 200k home. We would still lose 45% of our disposable income through interest passed on in prices.

To further the above points I’ll leave you with a little thought experiment.

What would happen if………

We would nationalize all banks. This would not be unfair, they are all busted and they already needed 16 trillion in Federal Reserve handouts. They are still all under water.

We would weed out all the BS. Derivatives would all be canceled, all the funny financial products gone.

We would maintain real debts by businesses and consumers, mortgages, and the national debt.
But we would cancel all interest payments from now on. Of course, savers would also no longer receive interest, but keep in mind that the average American loses far more in debt service than he gains in interest on his savings.

If debts are repaid, the money supply deflates, to maintain a stable money supply we would give out as much new credit as there are loans being paidoff.

What would this mean? A direct end to the depression, because enormous purchasing power in the economy would be released. Consumers would be twice as rich, prices would collapse because capital costs are gone.
The credit of the people borrowing from the banks would massively improve, immediately putting an end to solvency problems of these banks. There would be no more bailouts.

The Government would have an immediate windfall of 700 billion per year, which is what it currently loses on debt service. But the Government, too, loses half of it’s disposable income to capital costs through prices. Not to mention the increased tax income from an exploding economy. So it is likely that without any austerity the deficit would disappear quite soon.

The banks would be reorganized, many people, especially the expensive ‘traders’ and ‘investment bankers’ would all be gone. All that would remain are the people running day to day banking services. Therefore the costs of these banks would be much lower. These costs can (and must) be passed on to debtors, but they would be low.
I believe that managing a risk free loan like a mortgage should cost no more than max. 10% over thirty years, so you would pay maybe 220k for 200k home.

There would be no more bailouts, no more bonuses. The wealth transfer from poor to rich would end over night.

All these benefits would go to Main Street. It would imply a major decentralization of economic power, which is also a key point.

Of course, it would disown the Trillionaires, but hey, I say enough is enough.

Now, I’m not saying that this what we should do at this point. This is just a thought experiment.

It shows it is not debt that is the problem, but interest. It shows that it is not a full reserve gold banking system we need, but interest free credit.

Of course, with this analysis we have not addressed inflation, which is strongly on the minds of most proposing full reserve Gold backed currency. We will deal with that next time.

This article was written for Activist Post

Related:
On Interest
Budget of an Interest Slave
Usury: why we don’t build Cathedrals these days….
Debt Repudiation or an Interest Strike?

62 Comments
  1. “What would happen if………”
    New Zealand has for years been the guinea pig for global banking trials. Indeed, we have performed marvelously and played well for the World Bank, IMF Rothschild’s etc.
    Considering our curriculum vitae I would like to put our name forward as the nation to trial this “experiment”.
    I believe the person to contact would be the Hon(?) John Key, head of the Corporate Government c/- the Beehive, Wellington.
    A further experiment we raise our hand for would be the closure of the Inland Revenue collecting system which transfers another huge portion of the nation’s wealth to the oligarchy (just why we volunteered for this experiment in the first instance is most incomprehensible).
    JC

  2. The so called central banking systems The Fed, BOE, ECB, World Bank, IMF of the world in fact never earn this “money,” not only because they produce no product or actual service for it, but because the “money” they pretend we must borrow from them is no more than our own promise to pay. Nor are they actual creditors, for on the contrary, they give up nothing for our promises to pay, and only intervene upon our commerce to pretend the justification for dispossessing us of all our production is no more than their unassented authority to no more than publish our promissory notes, at no practical cost to themselves whatever. They thus collect, just in ostensible principal, so much as all the wealth which is ever subjugated to these obfuscations, only as if this mere publication of our promissory notes made them actual providers of credit; and only as if any resultant debt is ever actually owed to them. They further subject these lies then to interest, as if actual risk existed in the negligible costs of no more than publishing our promises to pay. All these intentional falsifications of principle then are such blatant, self evident, and ever demonstrable facts that it is amazing any truly free and just people would ever tolerate their fatal subjugation to these obfuscations for nought. Evidently too, this is the common observation of today’s vast pretended representation, for never were these purported principles subjected to the assent of a knowledgeable, intelligent public; nor is it possible they were ever passed by one, for it is intellectually impossible to intelligently ensure our demise for no more than handing over the publication of our promissory notes, the very fulfillment of which is ultimately even made impossible by the breaches of principle in the resultant, wholly unnatural, ever unjustified, and fatal arrangement.

    • Pal permalink

      Here here….money is just one institution that needs a total overhaul

  3. Carl Jones permalink

    “”I believe that managing a risk free loan like a mortgage should cost no more than max. 10% over thirty years, so you would pay maybe 220k for 200k home.””

    Surely the home would now only cost 90K??????? So total home costs would be 99k.

    Good article…which infers the collapse of banking. But what about the corporations? If just one country banned corporations from its shores and that means any imports from corporations, then investment will surely flow into that nations domestic businesses/production, returning jobs??!!

    Other nations would soon follow. A lot of the debt generates interest and we have this debt, because huge swathes of working population are not producing anything of real worth. Of course, we now get into over population…not that I am a “culler”. Its just that population growth is really corporate growth. If you remove that factor from the now broken capitaist business plan, it would fail…and it is failling with population growth.

    • indeed Carl, the house would be much cheaper without interest. In fact, the capital intensive industry that is construction can see cost for capital as high as 75%!

      • Carl Jones permalink

        75% is the number that I have heard mentioned in othet articles. things are bad now…they can continue to print, but for how long?

        I have folkowed this “designed collapse since the late 20th century and especially so since Dubya was put in the White House. If they are collapsing the system, what is the next. system and will there be WW3 and a human cull before it comes into being??

        • Pal permalink

          The best indicator of what is to come is the appointments to key positions – such as Bernanke the ‘expert on Great Depression’ taking over Greenspan. In that regard, if you want to try a Soros, look to the top candidate to replace Mervyn King at BoE and strategise accordingly….

          • Carl Jones permalink

            I have been banned by the Daily Telegraph…it remains to be seen if this is just for the Olympics!!lol That was three weeks ago. Upto that point, I had destroyed every potential BoE candidate….its great to see DT articles moved to the sidelines, because they are massively flawed.

            • Pal permalink

              Any links to your posts – or are they down the memory hole?

              I never comment on newspaper sites, as i cant be bothered with Disqus. Plus, i only skim the commodity news headlines via RSS, then get into the meat of the matter on sites like this

              One thing I always see on any “mainstream” media outlet, is that the commenters are usually and mostly better informed, more analytical and more articulate than the ‘journos’

              If only that wisdom could be better harnessed…
              I am Spartacus….?

              • Carl Jones permalink

                my comments are there under Carl_s_jones.

                • Pal permalink

                  Down the memory hole then ;-)

                  http://my.telegraph.co.uk/members/carl_s_jones/

                  Whats in your Room 101? They’ll know anyway….

                  best

                  • Carl Jones permalink

                    wot?

                    • Pal permalink

                      Room 101 is for people who say things such as : “Well put…stunning!! We need a revolution in the UK….”

                      No?

                    • Carl Jones permalink

                      The public get what they deserve. They say markets need confidence…the trick needs to be believable. While the elite can continue the illusion tbat the majority still have a stake. Then there won’t be a revolution…the sheeple still believe they have a stake. In this sense, people are crooks, they are all out for what they can get. Even though they could lose nearly every thing.lol

                      going to bed now.

                    • I,m with you on that one. I have seen the enemy, and he is us!

                • Pal permalink

                  Ok…found them here on Disqusting

                  http://disqus.com/telegraph-201b4610c6e5f987d44fb98fe61c3342/

    • Pal permalink

      “If just one country banned corporations from its shores and that means any imports from corporations, then investment will surely flow into that nations domestic businesses/production, returning jobs??!!…..Other nations would soon follow. ”

      While I like the sentiment, I’m afraid thats a somewhat naive and too abstract analysis.

      You need to follow the money and realise that FDI, and its twin developmental aid, is not a quid-pro-quo!

      Also, consider the experience of a country such as Albania under Hoxha. He attempted the kind of financial and commercial ‘autarchy’ you suggest.

      • Pal permalink

        here a link to Hoxha’s works. Blisteringly relevant to thinkers of any persuasion, or none…

        http://www.marxists.org/reference/archive/hoxha/

      • Carl Jones permalink

        I hsrdly think “Albania” is a worthy comparison to the US & UK where their service economies can’t sustain them with endless debt.

        • Pal permalink

          Why “Albania” in quotes?

          Im not making a comparison of their economic stature or structure. Im highlighting that if you want to see what happens to countries which attempt to pursue their development outside the current financial and commercial system – well, thats one history to consider

          Im also at a loss at to how you imagine any Western states would ever countenance such a thing as you propose, as they and their constituents are the chief beneficiaries of the current system and its global inequities (enshrined in institutions such as trade agreements, currency regime, etc)

          regards

          • Carl Jones permalink

            We hear this question all the time

  4. Hello Anthony,
    All very true and shockingly simple, in a way, but we all know that the world does not run on good will and a fair go for all. Interest payments on debts to large faceless institutions called banks re minds me all too well of the efficiency of the economic structure constructed by stealth over centuries that we are all forced into.
    The cost of money/credit creation that is essentially a counterfeiting operation given legitimacy through our government institutions and legislative instruments holds us locked into an economic system that is fundamentally intertwined with Uber-world financial instruments that enable the huge corporations to amass a employee/willing slave pool of over 50 million and counting.
    With this sort of international lobbying inertia created by these 50 million minions moulded out of strict and overweening corporate governance, whole national populations can be convinced to see nothing except a future where the promise of insinuating yourself into a corpuscle of the corporation takes priority over all other moral/ethical considerations.
    In this fast evolving fascistic amalgamation of government and corporations, those terms will loose their differential meanings in law and practice as evidenced by the revolving door that exists between the higher echelons of the senior ranks of the public service and private industry, such that now the demands of the corporate sector have become indistinguishable from the mandates legislated by our governments.
    This is such in all western style democracies these days, as the march of the corporation to control or destroy all in its path towards its final goal; to have every citizen of the world submitting to a system of professional and private intrusion that will render every individual a host to the parasitic corporation that effectively controls their every waking moment.
    The dream of our stupid but academically legitimised ‘Think Tank’ zealots envisage an end-game of only one-world corporation and that corporation has the capacity to hold every individual on the planet in an evaluation network that will rank you as a number on a screen that will accord you certain rights and privileges that will shorten, lengthen, or vary the quality of your life according to your rank as algorithmically factored from the cloud mainframe that is tasked with such tedious calculations for the no longer numberless masses.
    That would be what the corporate heads would call progress through innovation!
    Of course there will be a separate programme fire-walled from the main-mainframe that will deal with the elite controllers, which will of course, bring forth its own vipers-nest of intrigue and deceit as those who consider themselves born to rule fight for the right to be the only God on Earth.
    I do not see a happy ending for the elite (or us!) under this scenario of the incorporation of the entire planet down to its last particle. It is obvious that unless you can get people to act and think as robots, trying to systematise peoples lives will not work as these ideas (political orthodoxies) turned societal experiments do in the end get played out to their demonic conclusion of collapse and chaos.
    This is why all past great civilisations have eventually fallen into decay and dissolution. States that wage wars of needless aggression to install their will on those who do not want or wish it will bring those wars to their own home territory eventually (look at the urban acts of death and destruction happening daily in the USA and most other countries in one form or another), with the inhabitants reverting to a more primitive tribal structure re-assembled from the wreckage of their previously unifying modern/ancient feudal/financial system of ownership (debt) and homage (interest payments) to the institutions/Royalty that previously held us in their con-game of the promise of freedom from bondage (future prosperity).
    They will become fragmented groups, their differences made all the more apparent from the violence inflicted on each other during the chaos that will be part of the collapse of that con-game of wealth confiscation from the poor to the rich that you so well explain in your videos and writings that I wish I had more time to read, watch, and examine.
    However, this time it is different in as much that this little keyboard here allows me to articulate and communicate such concerns to other people such as yourself that would have been considered inconceivable not so many years ago and that is unleashing a accumulating aggregation of intelligence that will be hard to quantify by those who wish to do such things for the purposes of mass manipulation and control.
    This is the factor in which I place a lot of my hope that the future will not be the one which seems so inevitable at the moment.
    Hope you are well my infrequent pen-pal (my fault!), and here’s to breaking free from the straight-jacket of soul destroying conformity to the Cult of the Korporation!
    PS The moniker and the site it refers to is still embryonic as time is not available to form it into anything worthwhile, yet.
    That’s for another day.
    Cheers till next time.

    • thanks horserotovator!

  5. David permalink

    The State should be the one issuing money/credit to people in a way such as not to foster competition where basic needs are concerned. The homeless and hungry we don’t need. In fact the whole nature of predatory capitalism should be avoided. It should be the duty of the State to completely help all the people without profit. It should be a birthright that countries exist for the benefit of the citizens not just for the elites or elite races! Leave competition where it belongs…in sport. Predatory races and predators should not be given any chance to convert all aspects of living into their profit machine.

    Face it man, the problem is not only interest but debt and the whole darn financial system. No private entity should be printing and loaning money to Governments or Individuals. No particular race should have a monopoly of money printing. They work against the ‘cattle’ in other races, impoverishing them and turning them into slaves. The same race never runs out of money and calls this ‘competitive’ advantage. Thus all the important and big economic institutions either belong to them or are run by them. The day of this paradigm is over.

    • I fear you expect a little too much from the state. From your vocabulary I deduce you probably don’t like libertarianism, which is cool, but they’re not completely crazy either. Government was always owned by the plutocracy, just read some roman history to get a basic idea.

      If you’re against monopoly, why would you be for a state monopoly on currency?

      Why is debt a problem?

      Look at it this way: if I borrow 200k to buy a 200k home, I basically live for free while I pay off my house: every installment I pay, just adds up 100% to asset position.

      I only have to finance maintenance.

      The debt is not the problem. I’m not promoting going into debt to buy silly consumer nonsense like Iphones. I’m talking real necessities, like the house.

      • David permalink

        My comment points to what must be done by way of reform or overthrow. The embedded bloodlines, races and groups that form the power structure must go. Civilization is not serving the needs of the people. Almost 1/3 of Earth’s population is either starving or on the brink. Living is torture for too many. The Bankers and the principal bloodlines must go.

        The world has enough to give everyone enough. The problem is that the system has been created by the Khazars for their hegemony. That is no longer tolerable.

        While you argue from within the system, I argue from outside the box. The status quo must go and not be re-invented. I envisage Government as being of the people, by the people and for the people. Rings a bell? Ron Paul could have made a difference!

        • lol! Ron Paul out of the box???

          Perhaps you need to read a little of what I’ve written of that typical Money Power change agent:
          http://realcurrencies.wordpress.com/2012/01/15/the-ron-paul-challenge-10-reasons-why-the-alternative-media-is-failing-this-test/
          http://realcurrencies.wordpress.com/2012/06/10/the-ron-and-rand-paul-betrayal/
          http://realcurrencies.wordpress.com/2012/06/10/the-ron-and-rand-paul-betrayal/

          Interest free credit by Mutual Credit facilities, while getting rid of the entire banking system, which is one big monopoly anyway, would be considered ‘out of the box’ by most………

          • David permalink

            I read your views on Ron Paul. You do have a keen sense of perspective backed by info and analytical ability. From the Founding Fathers to JFK and other assassinated Presidents, Masons can do good things. Ron Paul belongs to this category. His Economics might be Austrian but that is a minor fault. If he could have rid us of the Federal Reserve….what comes after would be a comparative joyride.

            A new paradigm is necessary…..one based on cooperation. Competitive structures bring out the evil in people. Where there is WIN, there is LOSE. Those who invented and perpetrate the system plan to take all and call it WIN. Life is no game. The other components of the system are just as good a case for scrapping it. Wars, Allopathic medicine, Legal tyranny, GMOs, drugs/arms/human trafficking etc etc….there is no escape.

            We are fed up of being strawmen. We have souls which belong to God. The system wants to enthrone satan. God, of course, must do his share! That, we await!

            • thanks for taking the time to read them, notwithstanding my rather cocky comment……..

        • But we completely agree on the problem: bloodliner banking families. Don’t need them.

          • David permalink

            Definitely! In previous centuries we did not know so many things….that the Protocols existed, the religious trap, the experts in education were in fact mind control produced by think tanks, etc etc. The ‘asleep’ have not noticed! It may already be too late! Only a discovery of the potencies of the soul can help us!

    • huibvde permalink

      The greatist challenge of mankind. An Equal World.

      Everybody is the world and only everybody can change the world.

      Don’t count on the Goverment, we have to change and we can.

  6. Hallo Anthony,

    Yes , you’re right about the interest. This money system is only transferring wealth from the poor tot the wealth. It will make a big difference when de banks are stopping with it.The most of the people who are reading this blog already know this.

    I had a discussion last week with Holland4MPE.

    In my opinion is debt also an unstable factor in a society. Debt creates uncertainties bij the people who loan it en pressure by people who borrow it.

    In a closed money circuit the lent money will always flow back into this closed money circuit, but you will also get diffence between wealth in a society. You get people who most borrow and people who have the money, because the wealth difference which is made now, is already big.

    In my opinion is the borrow of money, the an expression of wanting things you can’t buy. The bankers gave in to this expression a few houndreds of years ago.

    Its time to life today and not in the future. First save money before spending it.

    Groeten Huib

    • Hi Huib, thanks!
      “Debt creates uncertainties bij the people who loan it en pressure by people who borrow it.”

      Consumer debt is usually nonsense. But business loans certainly are not. They are basically inevitable.

      Also: people should be able ot buy their house. Otherwise they would remain slaves to landlords.

      With Mutual credit there is no uncertainty for the lender, as there are no savers who lend out the money: all the cash is created the second people go into debt.
      The pressure for the borrower you mention would certainly be less than the pressure paying rent.

      • Carl Jones permalink

        In the UK, students get loans through a government system and repay under certain conditions throughout their working life.

        The gov. says this is fair….so why not give every 21yo enough money to buy their house outright and repay the gov. over the rest of your working life????????lol

        • good point!

          OF course, the long the loan runs, the more interest is charged………

          • Carl Jones permalink

            Yes, but its the principle…this brought in by a Tory government. You’d think they’d make each student compete for finance in the market (lol)…the nonexistant market!!!

            With a massively failing econony, not that many students would get finance, especially as non EU students can be imported on whim.

  7. The only currency which we should be considering is mathematically perfected currency‚ As there is one and one only solution to inflation and deflation; to systemic manipulation of the cost or value of money or property; and to inherent, irreversible (and therefore terminal) multiplication of artificial indebtedness by interest… thus it is only by eradicating altogether the latter costs; manipulation of the cost or value of money or property; and inflation or deflation.

    The so called central banking systems The Fed, BOE, ECB, World Bank, IMF of the world in fact never earn this “money,” not only because they produce no product or actual service for it, but because the “money” they pretend we must borrow from them is no more than our own promise to pay. Nor are they actual creditors, for on the contrary, they give up nothing for our promises to pay, and only intervene upon our commerce to pretend the justification for dispossessing us of all our production is no more than their unassented authority to no more than publish our promissory notes, at no practical cost to themselves whatever. They thus collect, just in ostensible principal, so much as all the wealth which is ever subjugated to these obfuscations, only as if this mere publication of our promissory notes made them actual providers of credit; and only as if any resultant debt is ever actually owed to them.

    They further subject these lies then to interest, as if actual risk existed in the negligible costs of no more than publishing our promises to pay. All these intentional falsifications of principle then are such blatant, self evident, and ever demonstrable facts that it is amazing any truly free and just people would ever tolerate their fatal subjugation to these obfuscations for nought. Evidently too, this is the common observation of today’s vast pretended representation, for never were these purported principles subjected to the assent of a knowledgeable, intelligent public; nor is it possible they were ever passed by one, for it is intellectually impossible to intelligently ensure our demise for no more than handing over the publication of our promissory notes, the very fulfillment of which is ultimately even made impossible by the breaches of principle in the resultant, wholly unnatural, ever unjustified, and fatal arrangement.

    Pretended representation therefore would hardly achieve these purposes if a knowledgeable public discovered that the lies of pretended economy invalidate its every asserted principle; that none of this has even the least power to serve us in any way; that the allegiance of the government of every republic owes to the very perpetrators who, by taking so inconceivably from us, readily install and enforce usurpation in every vital office and controllable media. The perpetual, concerted evasion of accountability before us therefore is no accident, it is instead a calculated, vital accessory to the most serious, arrogant, and repulsive crimes in history.

    • Holland4MPE wrote: The only currency which we should be considering is mathematically perfected currency…

      As I understand MPE, the key is 0% interest extended to worthy borrowers. And to this point, I agree, there is no substitute – 0% loans alone are sustainable.

      Respectfully, I would take exception to the premise that only MPE should be considered as there are other plans to deliver 0% loans. Maybe you can explain why MPE is needed to provide 0% loans?

      Holland4MPE wrote: “Nor are they actual creditors, for on the contrary, they give up nothing for our promises to pay, and only intervene upon our commerce to pretend the justification for dispossessing us of all our production is no more than their unassented authority to no more than publish our promissory notes, at no practical cost to themselves whatever. “

      You really need to differentiate between “investment ” and “commercial” banks in making broad indictments of the banking industry. The 20 or so investment banks (in the U.S.) are the problem and they are in the process of wiping out commercial banks.

      In the last few decades, regulations on the investment banks have been systematically eliminated, unleashing them to prey on the people and the commercial banking community. In 1999, the Glass-Steagall Act of 1933 was repealed. Glass-Steagall effectively separated the activities of commercial and investment banking. The results have been staggering:

      The 10 biggest banks hold 60 percent of bank assets: In the 1980s, the 10 biggest banks controlled 22 percent of total bank assets.

      The six biggest banks hold assets equal to 63 percent of the country’s Gross Domestic Product (GDP): In 1995, the six biggest banks in the country held assets equal to about 17 percent of the country’s GDP.

      The four biggest banks issue 50 percent of mortgages and 66 percent of credit cards: Bank of America, JP Morgan Chase, Wells Fargo and Citigroup issue one out of every two mortgages and nearly two out of every three credit cards in America.

      BTW, it should not come as a surprise that the same mega investment banks own the controlling interest of the Federal Reserve cartel and are also the primary bond dealers for Treasuries.

      Don’t be too quick to eliminate the commercial banking system as they like us, need a new lending model to survive. They may be an important part of the solution and should not be broadly brushed as the problem.

      • (Any rate of) INTEREST is TERMINAL. God why is it so bloody difficult for some folks.
        Money creation should be taken away from private for profit entities, period. There is no justification. All we need is an accounting system. No more banks, no litle banks, no union banks, no investment banks, and no whatever banks……banks are our problem. Glass Steagal is bs and won´t solve our issues. No offense Larry

        • huibvde permalink

          Steady steady

          (Any rate of) INTEREST is TERMINAL. God why is it so bloody difficult for some folks.

          It takes time,

      • Only interest free loans are not exactly what makes MPE tick. It´s the money management rules in place which will solve inflation, deflation, systematic manipulation of money and property, and irreversable multiplication of artificial indebteness. How? A 1:1:1 relationship between money in circulation, obligatory schedule of payment, and remaining property value.

        While 12,000 homes a day continue to go into foreclosure, mathematically perfected economy would re-finance a $100,000 home with a hundred-year lifespan at the overall rate of $1,000 per year or $83.33 per month. Without costing us anything, we would immediately become as much as 12 times as liquid on present revenue. Transitioning to MPE would apply all payments already made against existent debt toward principal. Many of us would be debt free. There would be no housing crisis, no credit crisis. Unlimited funding would immediately be available to sustain all the industry we are capable of.

        There is no other solution. Regulation can only temper an inherently terminal process.

        If you are not promoting mathematically perfected economy, then you condemn us to monetary failure.

        • Holland4MPE wrote: “While 12,000 homes a day continue to go into foreclosure, mathematically perfected economy would re-finance a $100,000 home with a hundred-year lifespan at the overall rate of $1,000 per year or $83.33 per month.”

          Why would anyone want a 100 year mortgage? Most people would prefer owning as soon as is practical. From my understanding; a problem with MPE (mathematically perfected economy) is that the duration of the loans are unnecessarily extended in an attempt to equal the asset depreciation. Generally speaking, an asset that is used as collateral to secure a loan should not deprecate faster than the principal balance. But there is no reason why the payments can’t be made faster than the depreciation.

          0% loans do not require extra machinations. They are easy to calculate and issue and there is no need for central control. New money should be added as is needed to satisfy the wants of willing and worthy borrowers. No gatekeepers are needed.

          As Margarit Kennedy said (and I paraphrase) it is an epic failure of mankind that we are only able to devise profitable banking via interest charges. Commercial banks can provide profitable 0% loans by charging issuing and transaction fees and services. Additional money can be created as part of the loan package; upfront, to pay for loan fees.

          • It´s just a straightforward lineair example Larry. Implementation can be done however we as a people decide.

  8. samalbahaykubo permalink

    “The strange thing is, that even if you don’t have any debts at all, you will still lose up to 45% of your disposable income through interest.”
    Q: Is the point being made here that costs for other goods and services are inflated by 45% due to the interest the service providers have incurred? It’s an interesting point, as council charges and rates could also be lowered in an interest free economy, since cities and councils borrow money on the open market using taxes to repay the loan + interest. A step in the right direction would surely be the elimination of compound interest, allowing only simple interest, which, I think is where the article ended up.

    • A: indeed: no interest, almost 50% lower prices. No the article suggests to do away with interest altogehter: even simple interest is outrageously expensive: the mortgage example is simple interest.

  9. Thursday, January 16, 1873.
    Senate of the United States

    Mr. Pool presented the petition of the Hickman Lodge of Good Templars of North Carolina, signed by its officers, praying for the prohibition of the manufacture, importation, and sale of all intoxicating liquors to be used as a beverage in the Trerritories of the United States and in the District of Columbia; which was ordered to lie on the table.

    • at the time hemp was one the US’s main crops but nobody was speaking of reefer madness…….

      • Yes; and without hemp, Columbus could not have sailed to America…..
        Was there wide-spread use of weed in the 19th century ?

        Thursday, January 16, 1873.
        Senate of the United States

        Mr. Wilson presented a memorial of the Florence Temperance Union of the State of Massachusetts, signed by its officers, asking for a commission of inquiry concerning the traffic in intoxicating liquors and restrictive and prohibitory legislation for the suppression of intemperance; which was referred to the Committee on the Revision of the Laws of the United States.

        Mr. Scott presented a memorial of the Kennett Square Lodge of Good Templars of Chester county, Pennsylvania, signed by its officers, asking for a commission of inquiry concerning the results of the traffic in intoxicating liquors, and of restrictive and prohibitory legislation for the suppression of intemperance; which was referred to the Committee on the Revision of the Laws of the United States.

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