The debt, explained

Citrus Heights CA

Description

Take $100 face-value of debt, enter it as an asset. Write a liability entry of $100, and print a blank check for $100 (aka CASH). $100 was just born. That's really and truly how that works. But wait a second! If that's how all the money in the world is created...then how does interest get paid? If that $100 debt is at a 2% coupon for 10 years, then it is $132, not $100! But we only created $100! We will run out of money to pay off that mortgage on year 8! Where does the other $32 come from? Someone will have to borrow $132 in order for your $100 to be POSSIBLE to repay...and then someone will have to borrow $148 to make the $132 re-payable...and so on...and so on. That's why the debt ALWAYS grows. That's why holding cash is a money-losing proposition. That's why systematic social "safety" nets are necessary...because saving for old age is IMPOSSIBLE under such a system. From the moment we rejected commodity-money 107 years ago no other outcome was possible. But wait! There's more! Since we really are borrowing at interest to pay off yesterday's debts plus interest, we are paying compound interest! So. Not only does the debt grow, but it's growth must accelerate relative to the accumulated principle. THAT means the amount of new debt needed to roll over yesterday's debts will eventually be infinity. It means that you will eventually have to borrow infinity to repay $1 of debt. It is mathematically designed to collapse. And that point is imminent.