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Caporegime
Tell me you don't know economic theory without telling me you don't know economi - god dammit
Same £50 pays off villages debts
- Thread starter mattyg
- Start date
Tell me you don't know economic theory without telling me you don't know economi - god dammit
That is quite the recipe for civil unrest though, due to the absurd unfairness of it.
The idiot that just took out a colossal loan that he cannot afford for an Audi R8 the day before, suddenly gets it completely for free?
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Caporegime
Money would be instantly "worthless." its a complete utopian star trek
solution and humanity is never gonna be able to cope with it. Youd be better off in some hyper communist utopia where everyone gets a job, a "car", a house, a partner and 2 children issued to you at birth and you work you roll no matter what and you will be happy.
The world will probably have to end up like that in the future to manage resources.
Soldato
Oh I completely agree that it's 'unfair'. The world is already unfair/unequal so it just depends how unfair is defined really.
It certainly wouldn't benefit already rich people who rely on the income from credit given to the poorer people.
We can net off assets and liabilities, banks do it all the time, clearing houses do this... this is an obvious thing to do in some cases as you can net off assets and liabilities into a single payment, reduce counterparty risk etc..
That's an asset for the bank, they'd be rather hard-pressed to meet their liabilities (customer deposits) if you just took away the money they'd lent out.
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Both those assumptions seem obviously flawed, what about everything else that remains fixed the same while the currencies all get a huge supply of new money? Why assume all economies would create a similar amount of money?
Why not, plenty of rich people will have mortgages or other loans.
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Soldato
Sounds like https://www.investopedia.com/terms/v/velocity.asp
but I dont know that will explain it well enough and obviously OP scenario is an unlikely ideal.
but I dont know that will explain it well enough and obviously OP scenario is an unlikely ideal.
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Soldato
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Alternate reality:
The man deposits his £50 in a newly opened bank branch.
The manager lends £50 to person A.
The manager lends £50 to person B.
The manager lends £50 to person C.
Etc
Et voila, many people are now in debt, and the bank still has £50 in its vault!
The man deposits his £50 in a newly opened bank branch.
The manager lends £50 to person A.
The manager lends £50 to person B.
The manager lends £50 to person C.
Etc
Et voila, many people are now in debt, and the bank still has £50 in its vault!
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What does the bank do with it?
Add a zero to it, loan back £50 to each person and the cycle continues.
Boom.
The man depositing his savings earns interest.
The bank loans out the money and earns money to cover all it's administrative costs and make a profit.
Person A, B, and C get the credit facilities they need.
The system works for everyone which is why it's so ubiquitous.
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Soldato
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I am not criticising the system: just pointing out the £50 scenario works in other ways.
Jeez.
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Nobody said you were. We’re all just messing.