Storms wrote:I get debt does indeed create money. And it is pretty much right out of thin air.
But so does a farmers market. Provide the right conditions for the right seeds, and months later dress up like a hillbilly and you too can have people give you money for food that didn't exist before.
And essentially out of nothing, a little more wealth is created.
Of course, that's over simplified, there's alot of overhead and leg work that goes into farming and proper hillbilly attire, but I think it's fair to say the same is true for a mortgage company.
To some extent at least.
Correct me if I'm wrong, but in a nutshell, all this means is the rich will continue to get richer, easier and faster - essentially the pitfall of unchecked capitalism - when the wealth and power accumulates with a lucky few?
That's evil, but I wouldn't think it's a conspiracy. Its just the nature of beast.
Clearly, you have given this matter about as much thought as the average wage slave has.
And it is equally clear you did not take a peek at any educational videos.
Do you remember in school when you learned about compound interest? The time value of money?
Do you remember how you were also told how money is created by banks AFTER you sign a legal contract to pay back the bank, and just in case you can't make the payments you must provide 'collateral'?
Not many people remember that lesson because it is not taught in schools.
To use your example, the farmer must collect or buy seeds, then plant them, then tend them, then harvest the produce, then transport produce to the market. A lot of work.
The banker sits in his air conditioned office waiting for someone, say a farmer, wanting to borrow money (to buy seeds). The banker then draws up a legal contract which says the farmer will pay the bank $105 tomorrow for the privilege of borrowing $100 today.
Contrary to popular opinion, the banker does not have cash to loan out like Jimmy Stewart in 'its a wonderful life'. No. The banker CREATES $100 on the spot. How? With keystrokes on a computer. Its called 'checkbook money' and bankers are allowed to create it from nothing.
So far so good, you assume. Money doesn't grow on trees, so someone's gotta make it.
The farmer must pay back $105. But only $100 was created.
Where does the other $5 come from?
Thats where it gets complicated. Because the bankers know statistically a small percentage of borrowers will NOT be able to pay back the money because there is mathematically NOT ENOUGH MONEY IN EXISTENCE to pay back all loans.
Enter the Sheriff and FORECLOSURE. The bank employs 'law enforcement personnel' to TAKE the property of people who can't pay back their loan.
BTW - now you know what the police motto 'to protect and serve' means. The full motto should read: To protect and serve the Owners.
Its not capitalism. There is no luck involved, for the owners anyway. It is the time value of their money.
But don't take my word for it. Watch the videos. Or better yet, educate yourself. Will you be glad you did?
If ignorance is bliss, why aren't more people happy?