Monetary System

Factual Questions
1

Good Afternoon enlightened few

I recently watched a “flash-umentary” on the modern monetary system. The thesis of this piece of work is that money is created by the loans that are given by lending institutions, therefore without debt we would not have wealth. Is this entirely true? I found the work to be believable but a bit sensational and I am curious as to how much truth it holds. The link is:

http://joox.net/cat/44/id/1223084

Thanks

Trevor

2

I don’t have a firm answer, but the question was previously asked on this board. The example was an island economy of exactly two people, and the consensus did seem to be that the only way to create more wealth was through loans. I may be misremembering distinctions between money, wealth, income, and value though.

3

sorry about the repetition, i searched and did not see anything similar.

4

Wealth != money. You can have lots of wealth without a monetary system. Houses, land, factories, Pokemon cards, diamonds, canned food, all are wealth. Burning every paper banknote and erasing every bank entry and cancelling every debt would not destroy that wealth.

Money is just an accounting system to keep track of who owes what wealth to who. If you create a good, and someone gives you money for it, you can take that money and exchange it for another good of equal value to the good you created.

5

There is this recent thread.

6

Based on that thread, the documentary’s claim that today’s wealth supported by debt, seems to be a consensus. If the bank can lend out a dollar for every dime it recieves, the only way to keep the economy from colapsing in on itself is to continue to lend money. repayment of all debt would wipe out wealth.

7

Again, wealth is not money, money is not wealth. If everyone repaid all their debts at the same time, what would happen to the houses, cars, and pokemon cards? Would they disappear? No, the Pokemon cards would still be here.

8

Cecil knows everything (and occasionally drops a line to us mere mortals): How much money is there? With the U.S. borrowing so much, why aren’t we broke?