The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: GraceZ who wrote (233994)	12/22/2009 4:30:19 PM
From: Skeeter Bug	Read Replies (2) of 306849

let's be concise about specific issues b/c i don't think you understand the issues i'm addressing. you've agreed that our society uses debt to create new money. right? that's what you said and i quoted it several times. given that, let's walk through the process again (since you ignored the previous example). i live on an island with a bank. i borrow $200k to buy land from the bank. per the terms of our agreement, i will have to pay back $400k over time, including interest expenses. i work for the bank. the bank pays me out of the $200k i borrowed and paid to the bank. out of my wages, i pay my monthly land payment. the bank only has $200k to pay me - when they run out, i lose my job. where does the other $200k come from that will allow me to pay back the $400k total i will owe the bank over time? only $200k exists in the entire system based on the debt i took on to buy the home. you claimed growing corn could pay off this $400k debt, but that's not legal tender for debt repayment - the bank won't accept it corn as a mortgage payment. i can grow corn until i'm purple and there is still only $200k in the system when i will eventually have to pay back $400k. the exact same principles applies to gold, which was your second contention. that doesn't work, either. i can dig up gold and sell it to the bank for $100k, but all that does is transfer money from the bank to me, but the total amount of money in the system is still $200k (i just have more of it now) - half s much as i will need to pay off my land over time. in short, if they buy the gold from me, i will get laid off sooner as their cash will run out sooner. so where does the money come from in this single bank, single citizen economy? this example is a way to analyze the macro view while still thinking in terms of an individual. this is a debt based ponzi scheme. who benefits? who holds debt? who take wealth once debt can't be repaid? who is getting richer while society becomes poorer?

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