TV News LIES

Tuesday, Jul 25th

Last update05:20:13 AM GMT

You are here News Economy Interest - Our Invisible Slavery

Interest - Our Invisible Slavery

E-mail Print PDF

Let's say you want to buy a house and go the bank and get a loan. Say 200k. The simple truth is, after thirty years you will have payed back 600k. 200k for the principal and 400k (!!) in interest.

Now this might be ok, or at least somewhat understandable, if you were borrowing this money from somebody else, who has been saving it. But as we know, this is not the case. The money is produced the moment the loan is granted by the bank. In a computer program. By pressing a few buttons.

So basically you pay 400k interest for pressing a button. Granted, the bank needs to manage the loan during the time it is being repaid. But the cost for this is still only a fraction of the income they get through the interest.

When the bank creates some money by giving you a loan, it takes the money out of circulation when you repay. Repaying debts means a diminishing money supply. The banks only provide the principal, in our previous example 200k. But after thirty years, 600k has been repaid and only 200k was created. So how can this be? How can 600k be repaid by 200k?

It can't. Somebody else needs to get into debt to create sufficient liquidity to pay the 400k interest. And the borrower of the original loan must start competing for this liquidity with everybody else to obtain that, intrinsically scarce, cash.

This means that because of the combination of debt and interest, the money supply must grow forever. But we know that a growing money supply is the definition of inflation and that inflation is closely linked to rising prices.

So inflation is inherent in the system. This sounds strange, because Central Banks raise interest rates to lower inflation, reasoning less credit will be issued because of rising prices for it. But the higher the interest rates go, the more money must be created to pay for this interest.

More...


Most Recent Related Stories...


JPMorgan Whistle-Blowers Set to Reap Record $61 Million Bounty

JP Morgan whitleblowersTwo whistle-blowers are set to share a record $61 million award from the Securities and Exchange...

Study: ‘Buy America’ rules raising costs for US transit systems

Buy America increases prices of mass transitFederal requirements to buy American-made products may be forcing some U.S. transit systems to spend more...

CBO rejects Trump's claim that budget plan would eliminate deficit

Trump budgetThe Congressional Budget Office cast doubt Thursday on the White House’s claim that President Trump’s proposed...

Ascena closing up to 650 clothing stores including Dress Barn

Ascena to close 650 storesBetween 250 and 650 retail stores including Ann Taylor, Dress Barn, Loft and Lane Bryant are...
 
America's # 1 Enemy
Tee Shirt
& Help Support TvNewsLIES.org!
TVNL Tee Shirt
 
TVNL TOTE BAG
Conserve our Planet
& Help Support TvNewsLIES.org!
 
Get your 9/11 & Media
Deception Dollars
& Help Support TvNewsLIES.org!
 
The Loaded Deck
The First & the Best!
The Media & Bush Admin Exposed!