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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Skeeter Bug who wrote (233916)12/22/2009 1:37:29 AM
From: GraceZRead Replies (1) of 306849
 
I seriously doubt you pay the interest on your mortgage by borrowing additional money (who knows you might). You pay the interest by creating value that gets exchanged for money.

You don't need a bank or debt or even fractional lending to create additional "money" in an economy. Many historical instances of money existed far in advance of all these things.

Once you understand how it is that money grows in the absence of a modern banking system then you can understand how it is that debt isn't necessary to create additional money even though this is the mechanism we use to add additional units in the US. This is simply a mechanism and this mechanism doesn't create the value it represents, we do that. Even brand new printed currency sitting in a Reserve Bank has zero value until it is exchanged for something of value (our labor, our goods, redemption of savings etc.). IOW money doesn't become money until it is exchanged for something of value.

Additional fiat money could be created or minted in response to an increase in demand for savings and/or for increases in transactional balances due to a larger economy. Increases in money supply does not require additional debt.

Interest is just a form of return on capital which happens to be money. Surely you can understand that return on capital that isn't money capital doesn't require debt or even a bank?
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