Economics in One Lesson

Economics, I think, is a subject that has been deliberately mystified in order to maintain the status quo; that being - the rich get rich and the poor get poorer. Actually, it is not that much more complicated than managing the money in your pocket.

All money comes into existence as a loan to be paid back to the financial institutions (banks) with interest. When you take out a loan the money pops into being. When you pay it back it pops out of existence. Dollar bills? The same thing applies. The government takes out a loan. As security for that loan they issue a treasury bill or a government security and then print money to buy back the security. This sort of works.

What is the problem then? Interest. All of these financial institutions in the country, collectively, are asking back more money than they issue. The principal only, not the interest, exists. Basic arithmetic, take a pencil and paper and figure it out. This alone would eventually, and in a short time, put the country into bankruptcy. What speeds up this process is money that leaves the country. When you import more than you export, go on vacation to Mexico or send money out of the country to a poor relative or charity - that is money leaving the country.

So why the recent banking crisis; in return for a number in a ledger these institutions eventually gain control of all the real wealth - goods, services and property? Cash flow. No cash for the banks customers and the banks own so much property (much of which is not income producing) that they can't pay the taxes and upkeep associated with it.

The solution - simple. Stop issuing government securities. If the banks need cash let them take out a loan from the government. In this way the property would be returned to the people via the government.