Anna Bandanna I tried to reduce this to baby-step basics. lets see if Ive got this right now... How to create money - basic double entry bookkeeping: Bank grants a loan, puts money into the borrowers account: DR Loans Granted (An Asset to the bank) xxx CR Deposits (A Liability to the bank) xxx (The credit balance on your bank statement is from the banks point of view, not yours) Banks only need to keep a small percentage of actual cash on hand, say 10%. So as long as the loan is paid back and the deposit is withdrawn and ends up in another bank account, it keeps working. With the advent of electronic transfers/BPAY/Paypal/credit cards/EFTPOS, its easier for the banks as cash is rarely needed, so they can keep lending, creating money, and making profit from compounding interest. If the loan isnt paid back or the deposit is withdrawn in cash and stuffed under the mattress, it eventually falls apart. If both happen, it falls apart even quicker. Which I guess is why a run on a bank by depositors will close it down quick smart. Then the government steps in as the borrower, making national debt go up. Then the government has to do something with all this money. It creates things, then needs more money to sustain them. If the things it creates dont produce money to pay back the loans, it has to raise taxes - unpopular - or borrow more money just to service its debt. Because of interest, the amount that has to be paid back is more than the amount of money that exists in the economy, so somewhere more debt/money has to be created. Because of compounding interest, even more has to be created. It becomes a vicious cycle. Like an individual borrower, the government can only do this for so long before it becomes a credit risk and cant borrow any more money. It could print more money independently of debt but this would cause severe inflation, making the currency worthless. Cui bono? Who benefits from all this? The banks. They cant lose in this deal. Unless everyone with a deposit takes their money out of their bank account and holds it in cash, and everyone with a debt defaults on their loan. But if the cash reserves are only 10%, only 10% will be able to get their money back. And if it was tried all at once the bank would shut it down before it got to 10%. As for the debt, it can never be eliminated, as more debt has to be created to repay the interest. Even if theres a debt amnesty, the system just starts all over again and ends up in the same place. Pretty neat trick huh? Guess those old fuddy duddies who used to say Pay cash for everything, even a house werent so dumb after all. Im done with the economy. Im done with economic growth. Im done with fiat currency and its illusion of wealth. Im done with profit at all costs. Im done with the government welfare state/nanny state and the freedoms we have given up for it. Im going with this approach instead: 1. Turn off the TV, and kill the mind virus that it spreads that makes you want more stuff (more money). Ive had a self-imposed media blackout for over 5 years now, and Ive noticed one big difference between me and most people: I am much more resilient, and my thinking is much more empowered. 2. Get rid of your debt, and do whatever you need to do in order to need less money. A lot less. Adopt voluntary simplicity - learn the value of Enough. Instead of trading all your time for money, give up some of your money and reclaim your time. Its worth it. I now live on a third of my previous income. The money has been replaced with things that are priceless, and cannot be bought. They are deeply satisfying, not just the temporary high of buying stuff. And come to think of it, I dont think I ever got this much of a kick out of buying stuff. 3. Learn self-sufficiency - how to grow your own food, make and fix stuff, and skills you can trade or gift. This is what Im working on now. Its WAY more empowering/satisfying than driving a desk all day and knowing you can fly to Bali whenever you want. 4. Learn real community. Switch mindsets from I look after me and you look after you (or the welfare mentality of You look after me and I dont have to do anything) to We all look after all of us.
Posted on: Sat, 29 Mar 2014 22:03:30 +0000