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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Bid Buster who wrote (69016)2/18/2001 7:44:11 PM
From: GraceZ  Read Replies (3) of 436258
 
a 6 year old child should understand if you borrow $1 at 10% intrest then $1.10 is owed back..the bankers get all the money in time, but the great ponzi scheme continues as long as the money supply grows..ultimatly the value of the currency erodes to zero not unlike a internut company issuing more stock to stay alive..it's dilutive and it's inflationary..hell i could go on and on but i seem to sing the same old song for months now...just go buy some gold for insurance

Stop thinking like a six year old if you want to understand how debt works in the economy.

Here's a real life example. The first machine I ever bought for my business cost 12 grand. I borrowed 10 grand at 5% interest paid back in a standard 24 month even payment loan. The machine produced on average 75 grand per year in profit for the next 10 years that I owned it and around 40 grand for the following three years. What is the internal rate of return on that original 12 grand?

If debt is used for productive assets it creates money. In fact I used to tell my assistant that that machine printed money (it was a photograph print processor). Debt is only really a problem when it is used for consumption or non-productive assets.
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