Our economic system, by design, does not work. It's ultimate failure/collapse is built into it's fundamental design. The big error I'm pointing out here is the concept of "interest". It is the concept of drawing interest on bank loans. It becomes clear if you break down the system to is basic components:
1. You have society - with no money/economic system.
2. After a process beyond the scope of this article, a monetary system is agreed upon to facilitate trade.
3. To initiate the system, 'money' must be introduced.
4. This is where the problem begins... So the bank creates the physical money and loans it to Citizen A, who agrees along with the rest of society that the paper money represents X value.
4a. Actually, the process goes: Bank(Fed Reserve) loans $ to Gov't (at interest), who spends it into society or loans it to banks who loan it to to society. So to simplify, we'll just say the bank loans it to society (Citizen A).
5. Now, Citizen A does whatever business he intends to do with the loan and in theory, pays back the loan (at interest).
HERE. IT WAS THIS SECTION THAT MADE THIS UNREADABLE.6. Lets make a model to keep these ideas concrete. Elements of model:
Citizen B - maker of Product 1
Citizen C - maker of Product 2
In our model, let's say the bank is initiating the economic system and loans Citizen A $5 to get the ball rolling. The loan agreement in essence says that Citizen A will pay back the Bank $6 (the loan + interest). So, Citizen A buys Product 1 from Citizen B for $3. Citizen B takes his $3 and spends it for Product 2, created by Citizen C.
Citizen A - $2 and Product 1
Citizen B - Product 2
Citizen C - $3
Citizen A is selling Product 1 for $4 (for a profit of $1)
Citizen B makes Product 1 so he doesn't need it. Citizen C is therefore the ultimate consumer. But Citizen C only has $3. However, he did just make that $3 from Citizen B and could easily to it again.
Here is where I first realized this was ridiculous:
ARE YOU KIDDING ME. I COULD/WOULD NEVER FOLLOW THIS LEVEL OF COMPLEXITY , GIVEN THE LIMITATIONS ON PAYOFF. HERE'S THE DEAL WITH ALL THIS STUFF ABOVE:
You create an economic system with a set amount of money. If that money is introduced via loans, it is physically impossible for the buyer to pay back all the money, plus interest. Because the principle amount is the only physical money introduced. Once the principle is paid back, there is no physical money remaining in the system.
Long before all the money is returned to the creator, people in the system will be extremely poor and the system will collapse. ...nevermind any interest... That's what's happening now. Banks are hoarding cash which is strangling the remainder of the economy/world. ...Pricks...