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Re: Austrian & Keynesian Theories Vs. Mathematical Facts

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  • Tue, Apr 20, 2010 - 03:16am

    #64
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Austrian & Keynesian Theories Vs. Mathematical Facts

Rhare,

So that dollar is permanently in circulation. 🙂

There is no such thing as permanant money in this system.  That ‘permant’ dollar gets extuiguished as soon as someone, somwhere in the economy uses it to pay down the principle balance of a loan.

If your a commercial bank, then that dollar had to be deposited into your bank first before you could lend it.

Banks do not lend their depositors money.

Since I’m the only other person in this scenario, you will pay me for my labor, then I give you back the money you gave me as payment toward the loan and interest.  This goes round-n-round until the loan is paid off and this represents the extra labor I have put in as interest.

If that is true, then why has the debt constantly grown for the last 250 years and now has grown to 59 trillion?  It clearly does not work that way.  Its impossible to borrow ourselves out of debt.