Great presentation. I have two questions, coming from perhaps a moral point of view. 1. Wouldn't the monetary system run just fine if interest were not allowed in the first place? I believe many ancient religions spoke of this. 2. How can a fractional reserve system ever be 'fair' or sustainable if it overstates the actual wealth that exists on the planet? I'm a beginner with these concepts...
@casimirpyahoocom no, becasue there would be no reward for the person that chose to save his money instead of spending it. his choice to save the money and lend it to entrepeneurs for capital investment is what drives the economy faster than the entrepeneur could do in the first place. supose this entrepeneur wanted to build a vertical farm to produce more food, but didnt have enough money to do so. he turns to the lender and the lender has a choice to either save the money for the lenders...
@casimirpyahoocom ...lenders own use or for a disaster, but the only incentive to offering the entrepeneur the money is interest. now if the entrepeneur succeeds and builds a farm and starts selling food cheaper, the whole of society benefits by having more and thus cheaper food. food is no longer as scarce as it once was. however if the entrepeneurs farm fails and he is not able to build the farm, instead of the whole of society being harmed by a loss, only the lender is hurt. because the ...
@casimirpyahoocom ...the lender takes this risk, he earns either profit or loss on the money that he lent out. now the problem comes when a tax is imposed upon this interest because if the lenders loan is profitable, a tax diminishes his profit and thus his incentive to benefit society, but a tax does not diminish his loses. now the tax can come in two forms, either a direct tax on profits, or an expansion of the money supply and a flooding of the market, which encourages riskier investments...
@casimirpyahoocom the problem here isnt the interest it is the use of fiat currency, or a paper currency, which can be printed and whose supply can be manipulated. profits and loss are the means by which a person measures their benefit to society. every citizen votes by spending their money on things that will benefit their own life the most and by increasing the supply of money, this sends false signals of profit and inhibits signals of loss, and prevents this communication from occuring....
@casimirpyahoocom ... SO after all that the way to keep these lines of profit and loss communication are to use gold and silver. the precious metals, have proven themselves worthy of exchange just because they are difficult to manipulate and because there is a fairly steady amount of them. although as humans mine for the metals, the supply will be fairly slow and much more predictable then someone sitting at a printing press to print dollars, euro, and Rnb... for more info go to mises(dot)org
1. Even today, interest is prohibited in most Islamic countries. Prohibition is a peacemeal solution, there are ways to evade it. Above all, it does not remove the basic flaw in the monetary system.
2. The understanding of the fractional reserve system is deluded by not clearly distinguishing between "money" and "credit". The overstatement of actual wealth results from the accumulated interests through the compound interest system.
Great presentation. I have two questions, coming from perhaps a moral point of view. 1. Wouldn't the monetary system run just fine if interest were not allowed in the first place? I believe many ancient religions spoke of this. 2. How can a fractional reserve system ever be 'fair' or sustainable if it overstates the actual wealth that exists on the planet? I'm a beginner with these concepts...
casimirpyahoocom 1 year ago
@casimirpyahoocom no, becasue there would be no reward for the person that chose to save his money instead of spending it. his choice to save the money and lend it to entrepeneurs for capital investment is what drives the economy faster than the entrepeneur could do in the first place. supose this entrepeneur wanted to build a vertical farm to produce more food, but didnt have enough money to do so. he turns to the lender and the lender has a choice to either save the money for the lenders...
phroto13 1 year ago
@casimirpyahoocom ...lenders own use or for a disaster, but the only incentive to offering the entrepeneur the money is interest. now if the entrepeneur succeeds and builds a farm and starts selling food cheaper, the whole of society benefits by having more and thus cheaper food. food is no longer as scarce as it once was. however if the entrepeneurs farm fails and he is not able to build the farm, instead of the whole of society being harmed by a loss, only the lender is hurt. because the ...
phroto13 1 year ago
@casimirpyahoocom ...the lender takes this risk, he earns either profit or loss on the money that he lent out. now the problem comes when a tax is imposed upon this interest because if the lenders loan is profitable, a tax diminishes his profit and thus his incentive to benefit society, but a tax does not diminish his loses. now the tax can come in two forms, either a direct tax on profits, or an expansion of the money supply and a flooding of the market, which encourages riskier investments...
phroto13 1 year ago
@casimirpyahoocom the problem here isnt the interest it is the use of fiat currency, or a paper currency, which can be printed and whose supply can be manipulated. profits and loss are the means by which a person measures their benefit to society. every citizen votes by spending their money on things that will benefit their own life the most and by increasing the supply of money, this sends false signals of profit and inhibits signals of loss, and prevents this communication from occuring....
phroto13 1 year ago
@casimirpyahoocom ... SO after all that the way to keep these lines of profit and loss communication are to use gold and silver. the precious metals, have proven themselves worthy of exchange just because they are difficult to manipulate and because there is a fairly steady amount of them. although as humans mine for the metals, the supply will be fairly slow and much more predictable then someone sitting at a printing press to print dollars, euro, and Rnb... for more info go to mises(dot)org
phroto13 1 year ago
@casimirpyahoocom
1. Even today, interest is prohibited in most Islamic countries. Prohibition is a peacemeal solution, there are ways to evade it. Above all, it does not remove the basic flaw in the monetary system.
2. The understanding of the fractional reserve system is deluded by not clearly distinguishing between "money" and "credit". The overstatement of actual wealth results from the accumulated interests through the compound interest system.
yokonirami 1 year ago