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Instead of looking at numbers on bills, use water as an example.
We have a lake with a certain volume. The exact number of liters does not matter. Imagine the water in the lake represents the money created, meaning the money in circulation.
Ignore water loss or rain adding to the lake.
This water is divided among the local people. The exact number of people does not matter, just know each person gets a certain amount of water.
Assume people cannot find water anywhere else except this lake.
Assume when receiving the water, each person promises to return the received amount plus 5% after one year, like an interest rate.
Where will each person get the extra 5% water to return after a year?
If someone steals water from others to pay their share, someone else will fall short. This means when someone manages to pay in full, they have taken someone else's share.
When a government is not allowed to create interest-free money and must borrow money with interest to spend, the result is people stepping on each other to survive.
In a sound monetary system, where money is created without interest, businesses borrowing money to operate have it easier. They can borrow interest-free, or the borrower only pays a small fee like an asset usage fee. If a commercial bank lends to a business in a high-risk sector, like maritime shipping where ships might crash and damage goods, the bank can charge interest, but the rate should not be too high.
P/s:My friend asked me to post this on the forum and wanted everyone's opinion on this theory. I have nothing to say.
We have a lake with a certain volume. The exact number of liters does not matter. Imagine the water in the lake represents the money created, meaning the money in circulation.
Ignore water loss or rain adding to the lake.
This water is divided among the local people. The exact number of people does not matter, just know each person gets a certain amount of water.
Assume people cannot find water anywhere else except this lake.
Assume when receiving the water, each person promises to return the received amount plus 5% after one year, like an interest rate.
Where will each person get the extra 5% water to return after a year?
If someone steals water from others to pay their share, someone else will fall short. This means when someone manages to pay in full, they have taken someone else's share.
When a government is not allowed to create interest-free money and must borrow money with interest to spend, the result is people stepping on each other to survive.
In a sound monetary system, where money is created without interest, businesses borrowing money to operate have it easier. They can borrow interest-free, or the borrower only pays a small fee like an asset usage fee. If a commercial bank lends to a business in a high-risk sector, like maritime shipping where ships might crash and damage goods, the bank can charge interest, but the rate should not be too high.
P/s:My friend asked me to post this on the forum and wanted everyone's opinion on this theory. I have nothing to say.
