>>>If nothing in the future exists today it follows that the interest I have to pay in the future does not exist today.<<<
Not necessarily. It may or it may not exist today. -- >>>If I am the only person borrowing $1000 at 10% I am required to repay $1100 in one year's time. UNLESS either I borrow another $100 to repay the original loan I cannot do it because the interest does not exist and can only exist through further borrowing (loans) which increases the debt.<<< There are several false assumptions here which I will just touch on. One false assumption is that in one year's time you will have had no earnings. If you have had earnings they will have come from the larger economy based on credit as to progresses through time. If you have had no earnings you could neither pay the principal nor the interest. In steady state further borrowing does not increase the debt. It merely transfers to someone else. In an expanding economy the debt is increasing but so is the credit. -- >>>Vic B - Earnings come from other who have contracted a debt. One may argue that some traders are not in debt but this does not alter the fact that as all money comes into existence as a debt a payment of interest is only possible by drawing upon another debt.<<< The false assumption here is that the economy as a whole must borrow in order to pay interest. The fact is that interest is merely a transfer payment no different than the payment of profit to any businessman. It is the transfer from your pocket to the businessman's pocket, from which he spends on things he needs to purchase or pay. Neither profit nor interest are subtrahends from system flow. You have to differentiate in your mind the difference between bank as bank and bank as business. Principal is paid to bank as bank and is cancelled. Interest is paid to bank as business and is spent. -- >>>If all loans were demanded to be repaid within 24 hours and if all outstanding debtors met their creditors call for payments outstanding eliminating any other factors under current double entry bookkeeping the debits and credits would balance out. This may equal the principal originally borrowed through bank loans but it would not be able to meet the interest required by the bank.<<< You borrow in order to get money to spend, so you spend the money you borrow. If loans are called prematurely very few loans could be repaid by the debtors. That has nothing to do with the fact that interest is charged. Something like this does happen when there are credit contractions so the first order of business is to prevent credit contractions. Let's say that a loan comes due with accrued interest not yet paid. That interest does exist in the form of assets somewhere in the economy. Whether you personally have the equivalent to them or not is a separate issue. Assets are not limited to money but in a rationally constructed system can readily be turned into money as needed. That is the use for financial services and the providers of financial services deserve to be paid for their services. Take the case of a simple discount loan: You tender to the banker your personal note for $10,000 payable in one year. He discounts it %5 and credits your account in the amount of $9,500. He credits his own account as a businessman in the amount of $500. You are expected to pay $10,000 at the end of the year. You received only $9,500 but $10,000 does exist in the economy. -- ____________________________________________________________ Get advanced SPAM filtering on Webmail or POP Mail ... Get Lycos Mail! http://login.mail.lycos.com/r/referral?aid=27005 ==^================================================================ This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. FREE! http://www.topica.com/partner/tag02/create/index2.html ==^================================================================
