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Overproduction was the problem at the time, not shortages. There was a shortage of money caused by loans - it was impossible to make money to both buy all the g
by Anotheroneagain 2y ago
Overproduction was the problem at the time, not shortages. There was a shortage of money caused by loans - it was impossible to make money to both buy all the goods and pay all the loans. This is why money lending has to be banned, as it makes the markets stuck like this and causes a depression when the economy improves.
- lazide 2y agoHuh? How is the economy improved in a depression?
- Anotheroneagain 2y agoLoans cause a depression when there is plenty. A farmer takes a loan when the price of wheat is $2 a bushel. But the economy improves, there is plenty of wheat for everybody, so the price of wheat halves. The farmer can't react to it by growing less wheat, he has a loan to pay, he may even need to increase his production to be able to pay even with the reduced prices. This is happening to everybody. Any time money is made, part gets used to pay off debts, and isn't spent on goods that others produced, which further drives the prices down. You will soon reach a point when nobody will buy any more wheat for any price. You go bankrupt, and the bank gets your farm, but the farm is worthless, nobody's going to buy a farm in such an economy from the bank. The bank now has no money to fulfill its obligations. The money it lent you, and which was lost, is still on other people's accounts, so the bank can't give them their money when people demand to withdraw it. Nothing about it can be fixed by giving further loans - loans for consumption only create more debt in the process, and there is no opportunity for bussiness lians, as there is already too much of everything.