4 ms·

This really smacks of propaganda from a bank (and oh -- look who's publishing it!). You can really think through this yourself logically: - There is nothing m

This really smacks of propaganda from a bank (and oh -- look who's publishing it!). You can really think through this yourself logically: - There is nothing magic to lending money - Interest paid back creates an incentive to lend money (not to borrow it) - Borrowed money always (ALWAYS) represents risk, because the borrower may not be able to repay. - Risk must always be measured. You can choose to ignore it, but it never goes away. - If money is created as debt, how do you explain bankruptcies?

JoeAltmaier 3y ago
Can't all those be turned around? I don't think they're any kind of truism. Interest compared to return on your use of money may not be any kind of disincentive (you profit by borrowing, that's the expectation) Lent money always (ALWAYS) represents risk as well, for the same reason given above. There's risk in anything, sometimes to proceed you accept it. Calling that 'ignoring it' doesn't make it any more important. And I have no idea what the comment on bankruptcies is about. But I agree on the main point, which is some armchair pundit like the OP finds it easy to draw a circle around a cherry-picked part of the economy-space and say "See! Some Obvious Conclusion!" and think they've said something. You have to look at all of it of course, as a complete system.
stray 3y ago
> If money is created as debt, how do you explain bankruptcies? Banks typically loan money they don't have on hand (see fractional-reserve banking). And when they do that -- money is created out of thin air. Bankruptcies have nothing to do with it.
- wiredfool 3y ago
  Not really. Retail banks need to have the money on hand to lend. That can come out of deposits (leaving a portion in reserve for liquidity, should the deposits need to be redeemed. (hence, fractional-reserve)) or other capital. There's a ledger that has to balance. A Central Bank (at least one that is in control of its currency) can lend money and have it essentially come from thin air.
- danesparza 3y ago
  If money is created out of thin air, then why do we need bankruptcies? The money has been created -- why do we worry about paying it back?

JoeAltmaier 3y ago

Can't all those be turned around? I don't think they're any kind of truism. Interest compared to return on your use of money may not be any kind of disincentive (you profit by borrowing, that's the expectation) Lent money always (ALWAYS) represents risk as well, for the same reason given above. There's risk in anything, sometimes to proceed you accept it. Calling that 'ignoring it' doesn't make it any more important. And I have no idea what the comment on bankruptcies is about. But I agree on the main point, which is some armchair pundit like the OP finds it easy to draw a circle around a cherry-picked part of the economy-space and say "See! Some Obvious Conclusion!" and think they've said something. You have to look at all of it of course, as a complete system.

stray 3y ago

> If money is created as debt, how do you explain bankruptcies? Banks typically loan money they don't have on hand (see fractional-reserve banking). And when they do that -- money is created out of thin air. Bankruptcies have nothing to do with it.

wiredfool 3y ago
Not really. Retail banks need to have the money on hand to lend. That can come out of deposits (leaving a portion in reserve for liquidity, should the deposits need to be redeemed. (hence, fractional-reserve)) or other capital. There's a ledger that has to balance. A Central Bank (at least one that is in control of its currency) can lend money and have it essentially come from thin air.
danesparza 3y ago
If money is created out of thin air, then why do we need bankruptcies? The money has been created -- why do we worry about paying it back?