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> You're assuming the alternative to lending at interest is nothing rather than something. No, I'm arguing with what you proposed, which is this: > > People w

> You're assuming the alternative to lending at interest is nothing rather than something. No, I'm arguing with what you proposed, which is this: > > People would still lend money to their friends and family. Stores would extend credit to customers because they want to make sales. which is not in anyway a meaningful alternative to the actual credit market. > Notice that the first two are the only ones that are actually good for anything. Except that the first two only exist because of the third. > But you don't actually need any lenders for that. If all you want is to create new money and give it to people, the government can create money by fiat and just hand it out to all citizens, or pay for government with it in lieu of taxing people. It's the same thing, there is just no interest. It's the same thing, there is just no incentive whatsoever for the behavior to happen, so it reality it's not at all the same thing. This would cause massive devaluation of currency.

AnthonyMouse 9y ago
> It's the same thing, there is just no incentive whatsoever for the behavior to happen, so it reality it's not at all the same thing. What do you mean? The government creates money all the time. They love it -- they get to spend money without raising taxes. The only downside at all is that in the extreme it causes too much inflation. If we made it harder for banks to make loans but then created correspondingly more money and used it to lower taxes on people so they would have more money and not need to borrow as much, what economic difference do you see other than interest not being paid to banks? It may be easier to imagine if you think of the government as a bank that makes interest-only loans at 0% interest. > This would cause massive devaluation of currency. Bank lending already does that. Look at housing and education prices (where the inflationary effect of lending is strongest), or even the general value of the dollar over time. The dollar has lost more than 90% of its value since 1950 and far more of the increase in the money supply has been due to banks than the government. $1 in new loans and $1 in government-created money cause the same amount of inflation. If you replaced one with the other the only difference would be that no interest would be paid to the bank.
- wdewind 9y ago
  > The government creates money all the time. The vast majority of new money is not created by the government, and that fact seems to be missing from your argument. If we no longer had credit we would be shrinking the available money supply by about 90%. This would be completely catastrophic for not only the US but the entire global economy. Maybe you could be more specific about what you're proposing because I feel like I am not really understanding it.
  - AnthonyMouse 9y ago
    > Maybe you could be more specific about what you're proposing because I feel like I am not really understanding it. Cause less money to be created by banks and more by the government, and have correspondingly lower taxes (or even negative taxes) on middle income people.
- deleted 9y ago
  [deleted]

AnthonyMouse 9y ago

> It's the same thing, there is just no incentive whatsoever for the behavior to happen, so it reality it's not at all the same thing. What do you mean? The government creates money all the time. They love it -- they get to spend money without raising taxes. The only downside at all is that in the extreme it causes too much inflation. If we made it harder for banks to make loans but then created correspondingly more money and used it to lower taxes on people so they would have more money and not need to borrow as much, what economic difference do you see other than interest not being paid to banks? It may be easier to imagine if you think of the government as a bank that makes interest-only loans at 0% interest. > This would cause massive devaluation of currency. Bank lending already does that. Look at housing and education prices (where the inflationary effect of lending is strongest), or even the general value of the dollar over time. The dollar has lost more than 90% of its value since 1950 and far more of the increase in the money supply has been due to banks than the government. $1 in new loans and $1 in government-created money cause the same amount of inflation. If you replaced one with the other the only difference would be that no interest would be paid to the bank.

wdewind 9y ago
> The government creates money all the time. The vast majority of new money is not created by the government, and that fact seems to be missing from your argument. If we no longer had credit we would be shrinking the available money supply by about 90%. This would be completely catastrophic for not only the US but the entire global economy. Maybe you could be more specific about what you're proposing because I feel like I am not really understanding it.
- AnthonyMouse 9y ago
  > Maybe you could be more specific about what you're proposing because I feel like I am not really understanding it. Cause less money to be created by banks and more by the government, and have correspondingly lower taxes (or even negative taxes) on middle income people.
deleted 9y ago
[deleted]