“Please explain who is carrying the debt I used to carry. I don't get it. Are they still making payments on my stuff even though it's paid off?â€
Ok, back to the story of “The Rich Banker vs. Poor Engsetter†The story is now revised to include a third person named John. John is wealthy he has one ballpoint pen, two pencils and the clothes on his back.
“The continuation of the Rich Banker vs. Poor Engsetterâ€
A month later for reasons known to wealthy John, he wants my ballpoint pen. John talks to me about it and I tell him I want $0.50 and one of his pencils. John caves into his ballpoint pen obsession and pays Daniel the banker a visit. John signs an agreement for a loan of $0.50 at 10% interest with one of his pencils as collateral. John, bless his heart makes the exchange with me. I get $0.50 and a pencil and John gets another ballpoint pen. After the exchange I pay Daniel the banker a visit and hand over that evil dollar I’ve been carrying for over a year along with $0.11 ($1.10 plus one month’s interest) the loan is satisfied and I am FREE. Poor John doesn’t know why I started calling him Poor John. Poor John is in big trouble as I Engsetter vow to never get a loan again. And I now have a pencil and $0.39. In effect John now carries my debt. At the end of the year he will have to decide if HE wants to cut his losses by giving up the pencil he used as collateral.
Looking at the above story Poor John is not making all the payments on Engsetter’s stuff as Engsetter could not spend the dollar until Poor John came into the picture. If Engsetter could have spent the dollar on something else, then in order for his debt to be fully paid he would have needed John to carry more debt in order to make the full debt payment.
Since the dollar was still in Engsetter’s possession he was able to use that dollar to satisfy the obligation and close the loan. The loan agreement Poor John signed to obtain debt money that was used to obtain Engsetters ballpoint pen effectively transferred Engsetters original interest obligation to him. Poor John is now the one that must deal with the banker not Engsetter. My debt is now Poor Johns
Extrapolate the story to include more people and you will see that debt money is transferred around from person to person and business to business based on wants and needs. When it becomes difficult to obtain these debt dollars from others many times the only outlet is personal and business bankruptcy, foreclosures etc. these corrections are the result of a debt money system.
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“Inflation? What Inflation?...There isn't and hasn't been any for some time. The Fed would like to have about 3% IIRC, but has been worried until recently about deflation. Note that the Core Rate experienced its first DROP since 1982.â€
My definition of inflation is an increase in the paper money supply which was created from nothing as this increase devalues your dollar. Inflation always causes higher prices. Higher prices are not inflation itself. Higher prices are the results of inflation. I’m not exactly sure why inflation has not really appeared in many daily items everyone uses but I’ll bet we will see price inflation in these goods this year, kind of a lagging effect. The Fed printing press has been in full swing. The new Fed-created money roughly equals the amount of consumer debt extended
In the 1970’s $1.5 new dollars generated $1 new dollar in GDP. In 2001, the ratio was $5.0 new dollars to one. In 2nd quarter of 2003, the ratio grew to $6.5 new dollars to one this summer. Now it takes $7.
Ok, back to the story of “The Rich Banker vs. Poor Engsetter†The story is now revised to include a third person named John. John is wealthy he has one ballpoint pen, two pencils and the clothes on his back.
“The continuation of the Rich Banker vs. Poor Engsetterâ€
A month later for reasons known to wealthy John, he wants my ballpoint pen. John talks to me about it and I tell him I want $0.50 and one of his pencils. John caves into his ballpoint pen obsession and pays Daniel the banker a visit. John signs an agreement for a loan of $0.50 at 10% interest with one of his pencils as collateral. John, bless his heart makes the exchange with me. I get $0.50 and a pencil and John gets another ballpoint pen. After the exchange I pay Daniel the banker a visit and hand over that evil dollar I’ve been carrying for over a year along with $0.11 ($1.10 plus one month’s interest) the loan is satisfied and I am FREE. Poor John doesn’t know why I started calling him Poor John. Poor John is in big trouble as I Engsetter vow to never get a loan again. And I now have a pencil and $0.39. In effect John now carries my debt. At the end of the year he will have to decide if HE wants to cut his losses by giving up the pencil he used as collateral.
Looking at the above story Poor John is not making all the payments on Engsetter’s stuff as Engsetter could not spend the dollar until Poor John came into the picture. If Engsetter could have spent the dollar on something else, then in order for his debt to be fully paid he would have needed John to carry more debt in order to make the full debt payment.
Since the dollar was still in Engsetter’s possession he was able to use that dollar to satisfy the obligation and close the loan. The loan agreement Poor John signed to obtain debt money that was used to obtain Engsetters ballpoint pen effectively transferred Engsetters original interest obligation to him. Poor John is now the one that must deal with the banker not Engsetter. My debt is now Poor Johns
Extrapolate the story to include more people and you will see that debt money is transferred around from person to person and business to business based on wants and needs. When it becomes difficult to obtain these debt dollars from others many times the only outlet is personal and business bankruptcy, foreclosures etc. these corrections are the result of a debt money system.
------------------------
“Inflation? What Inflation?...There isn't and hasn't been any for some time. The Fed would like to have about 3% IIRC, but has been worried until recently about deflation. Note that the Core Rate experienced its first DROP since 1982.â€
My definition of inflation is an increase in the paper money supply which was created from nothing as this increase devalues your dollar. Inflation always causes higher prices. Higher prices are not inflation itself. Higher prices are the results of inflation. I’m not exactly sure why inflation has not really appeared in many daily items everyone uses but I’ll bet we will see price inflation in these goods this year, kind of a lagging effect. The Fed printing press has been in full swing. The new Fed-created money roughly equals the amount of consumer debt extended
In the 1970’s $1.5 new dollars generated $1 new dollar in GDP. In 2001, the ratio was $5.0 new dollars to one. In 2nd quarter of 2003, the ratio grew to $6.5 new dollars to one this summer. Now it takes $7.
