Economics Questions

Re: why do banks charge interest on newly created loans

rstruzik — Tue, 26 May 2009 23:05:13 GMT

let me guess, you watched "Money as Debt"?

don't do that

Re: why do banks charge interest on newly created loans

banned — Tue, 26 May 2009 20:35:51 GMT

inquisitiveteenager:
so why do they bother charging interest?

Because loaning money implies a risk. Charging interest is what incentivises them to take this risk.

Re: why do banks charge interest on newly created loans

JackCuyler — Tue, 26 May 2009 14:50:53 GMT

The first question is based on an incorrect assumption - that the money can only be spent once. This is obviously not the case. As for your second question, I'm not sure which "goldsmith" story you are referencing.

why do banks charge interest on newly created loans

inquisitiveteenager — Tue, 26 May 2009 13:41:14 GMT

if all money is loaned into existence, say a bank loans $10 000 , and since it is a debt-based economy

this is all the money in circulation, whether they charge interest or not does not change the fact that $10 000 i

all they can possibly get back, since no other money exists, so why do they bother charging interest?

can somebody please clear this up for me?

and also, in the story of the goldsmith, when he issued out fake receipts did he use these receipts to

purchase goods and services for himslef or did he loan the receipts out to people?