How Money is made by Borrowing Money and the Impact this has on the Environment
Index:
1) Is money made by borrowing money?
2)Where does the interest on my savings come from?
3) What is the environmental impact of money?
4) Summary
Is money made by borrowing money?
I heard two extremely wealthy men say something that I wanted to investigate.
Is it true that “you don’t make money, you take money”?
This quote refers to the fact that since money is only debt as discussed in my last article, it’s evident that everyone borrows money.
Besides when central banks print more money - cash that only accounts for 3% of the world’s total money supply.
Let’s look at the practical definition of borrowing
Borrow = take temporarily.
When you receive money, you take it temporarily… until someone else takes it from you/you give it to them.
If you borrow from a bank, you’re going to spend the money on products and services run by businesses who’re then gonna put that money into THEIR bank.
That bank will then loan that record of money back out to real estate, the stock market and businesses.
From these three places, that money will still end up deposited in the banks of businesses, as collateral in real estate to allow more loans to be taken out from banks and also deposited in a someone’s bank whenever stocks are sold and withdrawn.
That’s a lot of re-loaning and depositing.
But let’s look at you, the initial borrower again.
As a borrower, you’ve got to repay the bank you borrowed from the principal amount along with additional interest.
How’re you gonna do that?
You’re either gonna take money from consumers if you’re a business owner - money which was initially created by other banks as debt - 97% of the time as we know.
Or you’re gonna use money earned from your salary.
Money paid by your employers which was first paid to them as money from the banks.
Which we now know is debt.
Debt is money.
Money is debt.
You borrow money to repay loans which you already borrowed to begin with.
And the majority of this money ends up simply moving between different banks and often to assets of the wealthy…
Being real estate, the stock market and businesses.
What’d ya know?
This conclusion welcomes something I’m going to explore in probably every proceeding article in this series…
One can leverage money/debt in order to gain exposure to the kinds of assets that the wealthy own.
Although just to clarify, none of this is financial advice, but it’s interesting.
“When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is,” (Robert Hemphill).
Where does the interest on my savings come from?
That’s a great question.
The interest comes from the circulating money supply in the economy, or it comes from foreclosing assets put up as collateral when loans are created.
Assets where the interest far exceeds the principal.
Such as someone’s home or business.
This is where the cycle of debt and interest comes in.
A functioning economy requires a low number of foreclosures…
Because obviously no-one wants their house or business taken.
To achieve this, people need more money available in the economy to pay back their debts to the banks.
And to increase the economy’s money supply, the banks need to ironically give out more loans.
This leads to more interest required to be paid out, because these new loans have interest attached to them as well.
This indeed is a vicious cycle…
Because it quickly becomes clear that the interest you’re meant to be paid on your debt to the banks COMES from the circulating money supply in the economy…
Which is ONLY there because it was initially created as debt.
So essentially, you borrow debt/money just to be paid with other people’s debt/money later on.
AND, if you and enough of the population can’t repay your loans to the bank, the bank will give out more loans so that you can.
To a degree, money is fake.
Moreover, by understanding this cyclical concept of interest on debt being paid WITH debt…
We also come to understand that the government works DIRECTLY with the banks by way of manipulating inflation, interest rates and the reserve ratio to make people either borrow more money or less…
Which means that banks and governments perpetually make more money for THEMSELVES by increasing or decreasing the money supply in the economy as they please.
Which is interesting… and corrupt.
And something that I’ll talk about in the upcoming posts. (subscribe to the email list by the way)
Now I want to emphasise something.
Whatever the ideal life it is that you want, you can have it much better.
Because if you can understand how the world’s most powerful people manipulate the entire populous (even the people that literally work at your local bank), you can understand that “money” is abundant.
Then, you can begin learning about how you can leverage money as debt for the progression of your own life and that of your friends and your loved ones.
Now that you’re aware of the truth - your life is in your hands.
Continue reading.
What is the environmental impact of money?
If you weren’t here for the last article, keep this key fact in mind.
The supply of money in major economies like Australia, the US and the UK, will perpetually increase forever, because most money is made as debt and for the most part - money just keeps circulating between real estate, businesses, banks and consumers.
And while the supply of money grows within an economy, the production of goods and services ALSO needs to increase so that all that money can be spent.
To produce more stuff, a greater expenditure of energy is required.
This means more factories.
More deforestation.
More pollution.
More low-paid labour…
But, I guess it also means unemployment will theoretically reduce as time goes on and debt builds up.
Except when AI technology proceeds to disrupt the workforce.
But that’s another story.
Kenneth Boulding said it best, “anyone who believes that exponential growth [of the economy] can go on forever in a finite world is either a madman or an economist”.
What can we conclude from this information so far?
Nobody understands money.
Once society began to accept the money system of borrowing at interest rates like it has today, a cycle began.
Firstly, people demand goods, so they are made.
As businesses produce more goods, there is more demand for exchange and therefore more demand for money.
People need more money for the goods, so they continue borrowing it from the banks…
Or more so creating it via signing a loan document.
This then increases the money supply and simultaneously the total debt inside of the economy…
Which demands that more goods and services be produced to ensure money is getting deposited back into the banks.
Which further requires destruction of the environment for its natural resources as well as exploitation of workers to meet the demands of production.
This will inevitably destroy the planet…
AS LONG as national debt in an economy continues to increase.
Which it will.
Because debt it money.
And money is debt.
Here’s one special quote to end us off:
“Only the small secrets need to be protected. The big ones are kept secret by public incredulity (conscious ignorance),” (Marshall McLuhan).
That’s it!
Regards,
Riley, a student of life. A professor of potential.
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