You cannot know something unless you understand it. You cannot know that 1+1=2 unless you understand mathematics for example. You can claim you know but you wouldn't really unless you understood how you arrived at a fact.

So what is Interest again?

PG - another question: if you abolish the central bank, who/what controls the quantity of money?

btw - I was just as passionate as you are about FRB a couple years ago. The validity of it versus a gold standard sunk in. Very slowly, but it did.

Pat, all you seem interested in is badgering me, baiting me and inciting me...I am not interested ok?

The government controls the issuance of money. Congress. Just as the founding fathers instructed. In quantities only sufficiant to meet the needs of commerce and the growth of the population. Money would be backed by a real world basket of commodities broadly chosen and usury would again be outlawed. That is the only system that has any chance of success

No it isn't.

And define "usury" please. If you mean lending at interest, then there is no more borrowing permitted. If you leave any sort of loophole in the lending of capital then you will get interest-based borrowing whether you care to call it that or not.

Would there be banks in your system, is so how would they turn a profit.

I have told you this several times. I have nothing against lending of capital. You would be free to lend all your savings if you chose to but not at interest. You could lend for equity stakes like you do in an IPO or a partnership with your cousin etc. Interest must be removed from the equation. Interest is the problem not lending.

In your corn example that you posed yesterday... I explained that returning a bushel of corn to repay a loan differs from repaying a loan with debt money.

You can grow an additional bushel of corn and satisfy the debt...cycle closed

But with interest the "money" has to be created by yet more debt. It is not ever really satisfied because all money interest is yet more debt.

Do you not see this Karl?

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I have told you this several times. I have nothing against lending of capital. You would be free to lend all your savings if you chose to but not at interest. You could lend for equity stakes like you do in an IPO or a partnership with your cousin etc. Interest must be removed from the equation. Interest is the problem not lending.

An equity stake over time is interest.

I don't care how you denominate it. If you pay me in equity then I still eventually wind up with all the equity, which is ownership, and is the same thing as winding up with the title!

You're trying to run the same scam that Sharia Law does. Renaming something doesn't change with it is.

It's still interest.

"You would be free to lend all your savings if you chose to but not at interest."

*>BOGGLE<*

To deny the cost of capital is to deny all value.

No Pat, he's just changing the definition of terms.

Equity paid out over time is interest. He just doesn't want to call it interest.

It's the same scam that the Muslims run with their Sharia crap.

No it is not. Your equity stake entitles you to a share of future profits. It is a cut not interest. It does not inflate the money supply. It is not compounding.

You miss the fundamental point.

Interest begets interest. To pay interest more money has to be created by more debt which in turn generates more interest which requires more money creation via more debt.

In an equity loan...here is an example...

There is a fixed amount of money in the system. You have some capital, your savings. You loan it to a company who intends on making widgets. You and the company agree that you'll receive 10% of the profits. The company begins business and does well. They sell widgets and people no longer buy gadets. The money supply remains constant. The company you loaned to captures more of the existing money by virtue of a superior product. You get a share of the gains.

The money supply did not increase! That is the critical element. You loaned, someone borrowed, success and progress were had but there was no exponential growth of money supply(debt as all money is debt)

They system remains steady state. Sustainable.

Had there been interest money involved then more money would have had to be called into existence by more debt which in turn would entail more interest which would need more debt etc in this vicious doomed cycle.

"Your equity stake entitles you to a share of future profits"

No, it does not. By your own definition. You need to go back and read your own God-damned tracts.

It entitles you to participate in paid dividends. So I gues DRiP is anathema to you, too, then else you eventually end up owning every dividend-paying company in your portfolio?

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No it is not. Your equity stake entitles you to a share of future profits. It is a cut not interest. It does not inflate the money supply. It is not compounding.

No. Equity is ownership.

When I ran MCSNet we had capital stock. That's equity.

If you loaned me money in exchange for capital stock, you now had part of the company. When I paid back the loan, you kept the stock. That in fact is INTEREST - payment of something of value for the temporary use of your capital.

Now I come and ask for another loan. You want more equity. I am now forced to give you more of the ownership of the company.

Eventually you wind up with ALL the equity, and I own nothing.

Stop trying to redefine terms. Interest is interest no matter what you try to call it.

I said...and really, I can't engage you anymore you are just a trouble maker seeking to bait me with constant personal barbs and digs...I said...Lending is ok...lending for equity is ok...negotiate your loan however you want but not as interest! You do not read what I post, you do not understand the concept I have articulated repeatedly and you include some nasty comment with every reply. I'm asking you to leave me alone..ok?

He's right PG -- with your method any attempt to borrow funds to grow will ultimately lead to your complete divestment of ownership. That's self evident from the mathematics of your system.

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...I said...Lending is ok...lending for equity is ok...negotiate your loan however you want but not as interest!

All lending of capital that occurs with a price for the borrowing is in fact interest, no matter what you choose to call it.

Equity as in sole-proprietorship, or partnership. OK. Not "equity" as public-share. My bad.

Gen, what if you don't have to repay the loan as long as I keep the equity. Instead, you could buy back the equity at the market price if you wanted to clear the loan

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Gen, what if you don't have to repay the loan as long as I keep the equity. Instead, you could buy back the equity at the market price if you wanted to clear the loan

That's not lending. That's identical to what happens when you have an IPO or private placement.

Purchase != Lend.

Karl...I gave you an example...did you read it?


There is a fixed amount of money in the system. You have some capital, your savings. You loan it to a company who intends on making widgets. You and the company agree that you'll receive 10% of the profits. The company begins business and does well. They sell widgets and people no longer buy gadets. The money supply remains constant. The company you loaned to captures more of the existing money by virtue of a superior product. You get a share of the gains.

The money supply did not increase! That is the critical element. You loaned, someone borrowed, success and progress were had but there was no exponential growth of money supply(debt as all money is debt)

They system remains steady state. Sustainable.

Is there some part of this that you do not understand? The semantics of "equity" is not the point

The point is lending can happen without interest. That is the point, the only point.

You lend you get paid back with profits if your venture is successful...the money supply does not expand...there is no compounding of interest by debt creation.

I can't make this any clearer. If you have a specific question that I can clear up I will but this is really very simple

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That's not lending. That's identical to what happens when you have an IPO or private placement.

I think that's what PG means. At least, that was my understanding

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I said...and really, I can't engage you anymore you are just a trouble maker seeking to bait me with constant personal barbs and digs...I said...Lending is ok...lending for equity is ok...negotiate your loan however you want but not as interest! You do not read what I post, you do not understand the concept I have articulated repeatedly and you include some nasty comment with every reply. I'm asking you to leave me alone..ok?

lol

'can't defend myself, stop being so un-fair.'

bob

You're twisting reality Photo.

Look, no matter how I get paid for risk, if I lend you capital the payment is interest. You can call it whatever you want, but it's interest.

If production expands either the monetary system expands with it or you get deflation by definition. If it expands faster you get inflation by definition.

The problem with all economic systems in which lending is permitted is that because of risk premia the credit and/or money in the system still must expand over time faster than production does.

How you try to HIDE this is immaterial. Mathematically, it has to happen. This in turn means that you NEED to have recessions and bankruptcies so that this cycle is interrupted.

If you don't do that the system eventually folds back and collapses.

There's no way to avoid this reality with hinky claims, other than to prohibit all lending of capital. But then one can only finance innovation off personal surplus. That takes the economic system literally back to the days of cave men.

Even the basic letter-of-credit used to facilitate trade is discounted, which means you're back to interest being charged - even though it's not called that.

PG, I think the word "lending" implies having the interest to it simply by definition. What you propose (whether good or bad) is actually banning all lending but allowing borrowing of capital exclusively through equity transactions