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Kasz216 on 06 December 2011
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richardhutnik said:
Kasz216 said:
richardhutnik said:
Kasz216 said:

Money is NOT a zero sum game.

Money today is LESS than a zero sum game.  The way currency is produced makes it so.  When currency enters the economy, it enters with interest, which puts the system in a situation where there is insufficient money to service the debt, particularly if there is any form of economic slowdown.  End result here is the system will force people to default and go insolvent.  

Now, one can say WEALTH is not a zero sum game, and there is truth to that.  A system can have sustainable growth and be able to help more and more people.  This is a situation where more people end up winning.  But as it is now, it isn't so.  The end result today is a paper game where money produced stays in the financial system, and doesn't get out. Rich get richer because of how it is rigged, and unless you can get on the other side of the debt game, with money being leveraged, you fall further and further behind.  Sure, some who aren't on the debt game sometimes get lucky, and get there, but it isn't the norm any longer.

Except... that's not true? 

If it didn't get out, why would anyone want to build up their money they could never use? 

You consider all these statements to follow to be true?

* When money is created through the Federal Reserve, it enters the economy interest free and circulates, not requiring to be paid back with interest to the Federal Reserve.

* There is sufficient money in existence today to serve all the debt that is currently out there.

* The current system is not set up in such a way that it is impossible to pay off all debt out there, particularly when there is an economic slowdown that disrupts the flow of money throughout the system.

* Economists are not saying there is currently too much debt in the current system, which is holding back growth.

 

If you are saying what I originally wrote is not true, then you do agree with all of the above I wrote as being true in that, there is not a systemic problem with debt that results in the financial industry being richer while those who depend on it get further and further behind the debt cycle?

I don't agree with any of those.

Except... tentativly the first one.

I'm guessing you think the money created in QE1 and QE2 was supplied as repos.

However that's not the case.   QE1 and QE2 money was aquired by purchasing Treasury Bills... which they will probably never actually cash.

So essentially, the government buying government debt.  The Federal Reserve issues stock, however is not actually owned by any of the banks... the stock actually more of a "requirement for entrance" into the government system... essentially taking on the cost of oppuration.

Outside that... excess money is often put into an account to protect agaisnt failed Repos... which i'd think would be a good thing?  When this fund is considered more then big enough to cover loses the excess is transfered to US Treasuary who uses that money to pay off US Debt.  Or it's used to buy T-bills directly.  As seen with the above QE 1 & QE2. 

Additionally, I wouldn't say there was a systematic problem that banks get richer while those who rely on it get poorer.

That's the whole point of loans.  You want money now, so you agree to pay more to a bank to get a loan.

I mean, the world coudn't function in a zero interest loan enviroment.

The problem has nothing to do with the banks, and everything to do with the fact that those taking the loans aren't increasing their own wealth or income in the same way.

Additionally most of this profit gets paid out of the sysetm to those who hold stock in banks.  Which could be up to 53% of the population, who then spend or invest it in other areas.  Well outside those who put it right back in the bank, but those are more likely then not the poorer share holders.