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/sci/ - Science & Math

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1759254 No.1759254 [Reply] [Original]

If you never watched this video watch it now, it'll blow your mind:
http://video.google.com/videoplay?docid=-2550156453790090544#

We all know that banks create money, here's how it works:
-banks can loan more money than they actually have (9:1 ratio)
-if a bank makes you a loan of 10000$, it's literally "creating" 10000$ on the fly (you will then pay them back so it's not a problem)
-let's say that the interest rate is 10%, so you'll have to pay 11000$ in the end.
-you can get those 100$ from someone else
The problem is that all money is created like this today so for every dollar in circulation we owe the banks 1.10$. But those 10 cents don't exist!!!
So it's mathematically impossible to ever pay all debts back.
What do? How the fuck do we solve this problem?

>> No.1759276
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1759276

Stop using centralized bank system that used to be outlawed. Stop making investments that give incentives for people to fail. Invest more on small business and Tax big ones

>> No.1759298

Don't take out debts you can't pay back and you won't be one of the losers.

>> No.1759561

Basic econ failure. It's too bad. Fractional reserve banking has been in use since the middle ages. You'd think people would understand the idea by now.

> But those 10 cents don't exist!!!
Oh?

> So it's mathematically impossible to ever pay all debts back.
This is probably true. If everyone could pay their money back interest rates would be extremely low since there would be no risk. Probably not zero, but close to it. Banks could not pay interest on accounts because they couldn't charge interest on loans.

It'd be a strange world.

>> No.1759738

bump
Anyone knows more? something I could read about this topic?

>> No.1759750

>>1759276
Keep dreaming, it wont happen unless 90% of us get our heads out of our collective asshole.

>> No.1759759

>>1759738
I don't think there is a section for fantasy economics.

>> No.1759784

>>1759561
Would banks even work? lol

>> No.1759797

I like this debate.


/sci/ go on.

>> No.1759793

>>1759254
I heard some similar shit in Zeigeist. Could someone explain in idiot language why this is wrong? I'm not too familiar with economics, but I feel like this isn't right.

>> No.1759892

I just don't understand how money work.
I don't know if it's just me, but I got the impression that nobody really understands the system, even the economists or the bankers, i think they just play the game, but nobody quite understands what's going on..

>> No.1760036

>>1759254
I don't think it's got anything to do with the creation of money. It works the same if you have a limited, fixed amount of money. People can start lending their money with an interest rate, and it works as long as they use the interest rate to buy something from the market, so that amount of money is circulating again.
But if the total amount of money (T) is fixed and i start lending P and asking for P+I every time, if i dont spend I after a while I'll be controlling the majority of the money and if i lend it nobody can be able to pay me back.

>> No.1760080

ITT: OP discovers how the worlds financial system has worked since Alexander Hamilton invented the first national bank.

>> No.1760108

>>1760036
Goods and services will become cheaper. People don't take out a loan to stuff dollar bills in their mattresses. They use it to invest, either in themselves or in some venture. Some of those ventures will fail: that is why investment is a risk. Some will not: that is why we can expect interest.

>> No.1760145
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1760145

You're not supposed to be able to pay all your debts back .

That's the entire point of the system. It is something you have to accept in order to live in a system where credit is so widely available.

It's not evil, it is a system that has been used for almost a thousand years now.

It just so happens that we have got it down to a science by now, and you barely notice it unless you actually pay attention in class. Which no one does apparently.

By the way, this concept applies to almost every institution. Our national debt for example will never be fully paid. If it were someone else would go broke, and above them would go broke, and someone else above them would go broke, and so on and so forth.

>> No.1760193

>>1760145
Italianfag here.
feelsgoodman.jpg

>> No.1760215

>>1760145
> walk into bank, ask to see a loan manager
> ask for a loan to buy a "house"
> wink at manager to let him know you know you're not really supposed to pay the money back
> walk out with gobs of cash

He found the secret!!!!

>> No.1760285
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1760285

yea if I was a country i would put myself into debt even more, I'm pretty sure there will be a big war some day and or some huge devaluation of some currency so who cares.

update:
I just got a good idea to conquer the world!
Say that I'm a country like Spain:
- Ask france for a huge loan that I cant possibly pay back.
- Use part of the loan to buy tanks, nukes, f14s and stuff like that (even from France maybe).
- Attack and conquer France
- Debt canceled
-trollface.jpg
-repeat for the rest of the world