Economics is FAILING USsteemCreated with Sketch.

in #blog7 years ago


There is a village with 100 people. the each start with 100 dollars. to keep it safe, they form a bank, allowing everyone equal access. They choose one person to be the banker. The banker sees the opportunity for the village to get ahead, so (s)he begins giving loans. It works amazingly well, the borrowers are able to achieve all they want, being given equal access to resources, and are able to pay back in full.

After a while, the banker sees an opportunity to profit, so (s)he begins to charge interest. Now, an imbalance begins to happen. The banker is accumulating all of the resources. To make up the difference, the banker has to print more money, the people never realizing what is happening. As far as they are concerned, when they take out a loan, it is still from the original pool of the village's money. Now, the banker commands control of a higher percentage the economy. But it gets worse.
By printing more money, there is a net loss in total economic value. Had the loans continued without interest, the value of the money itself would have increased, as more usable capital (human, land, tools, etc) have been created from the same set number of currency units.

Value is not a supply-demand issue as classic economist would argue. All "value" is generated by human beings- their ability to think, redefine, innovate, and build. This is what value is made of, not the money itself. By adding a fluctuating (ever-decreasing) monetary value to these ideals, you stifle them. If one then had to define a true economic value, it is not the sum of the things, but the sum of the resources that are deployable by an individual to affect change. By adding an inflated number value, it ensures that the worker is always undervalued.

The bank would argue that their loans allow individuals access to resource which would otherwise go unused, but to do so is wrong, as it continually devalues the individual, the currency, and allows a system through which the average person is exploited, destined to be on the bottom of the financial system.

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