Get woke, go broke, SVB style

[Shemp]

The interest rates are connected with capitalism. Interest rates give the flexibility allowing for the maximum expansion of growth and greed. Without interest rates, their values would have to totally change, which would be opposed by every current capitalist.

You don't have to have interest, but you do have to have return on capital if savers, in aggregate, discount future versus current consumption. (Which is by no means always true. A society dominated by middle-aged people could easily have aggregate preference to defer consumption regardless of rates of return on capital. This so-called savings glut occurred recently in the USA and Europe , between about 2010 and 2021, because of aging boomers, and is an ongoing phenomenon in East Asia.) Return on capital can be through equity or debt with interest. The essential difference is that debt with interest is preferred by those with lower risk tolerance, but there are ways to make equity low risk. For example, regulated utilities and infrastructure (railroads, pipelines, toll roads) typically have very predictable income streams, so their equity (stock) can substitute for debt (bonds) for those with low risk tolerance. Real estate mortgages can replaced by gradual purchase schemes with initial implied interest, though the implied interest would vary if the real estate price didn't follow expected trajectory. (If you modify the scheme to eliminate the possibility of implied interest changing, you just reproduce debt with interest in a complicated Rube Goldberg scheme.)

So there is no real need for fixed interest to accommodate the important savers (households preparing for old age) and important borrowers (creators of physical capital, such as buildings, infrastructure, corporate wealth in general). Governments are huge net debtors only because governments don't equitize all their infrastructure. If all roads, bridges, public land and buildings were equitized as stocks, that would probably suffice to allow households to save as much as they need for retirement without the need for governed debt.

[Cornfed]

A simple way to solve the problem would be for there to only be one bank owned by the government. They would make interest-free loans to people with money created out of thin air based on the estimated net value the project would add to the economy. Therefore there wouldn't be much money-generated inflation, since although there would be more money, there would be more stuff for money to buy. To have this you would have to have a government that had an interest in the country, rather than the current ZOG.

[Shemp]

A simple way to solve the problem would be for there to only be one bank owned by the government. They would make interest-free loans to people with money created out of thin air based on the estimated net value the project would add to the economy. Therefore there wouldn't be much money-generated inflation, since although there would be more money, there would be more stuff for money to buy. To have this you would have to have a government that had an interest in the country, rather than the current ZOG.

Of course there would be inflation. Many ideas would be junk and not pay back the loan, so less stuff than money. More importantly, you don't address the issue of aggregate unwillingness to defer consumption without reward, which is the norm (other than during savings gluts). If no reward to defer consumption, no savings, hence every dollar created from thin air works be inherently inflationary because nothing to buy yet. Governments can create money out of thin air only because mechanisms currente exist (primarily interest on debt) to reward savers for deferring consumption.

The only thing that actually works is to maximally replace debt with equity. Scheme i discussed above does that, but even simpler is to discourage debt without actually outlawing debt. Allowing inflation to run hot (5% or so) will chase people from cash (whivh is non interest paying debt). Carefully designed tax laws will chase them from interest paying debt to equity.

[MrMan]

The only thing that actually works is to maximally replace debt with equity. Scheme i discussed above does that, but even simpler is to discourage debt without actually outlawing debt. Allowing inflation to run hot (5% or so) will chase people from cash (whivh is non interest paying debt). Carefully designed tax laws will chase them from interest paying debt to equity.

The US economy has massive amounts of debt, and is dependent on the economy growing, printing more money, etc. to pay off the debt (or maybe the powers behind the scenes know it will crumble and keep kicking the can down the road while personally accumulating real assets.) Would this switch to equity you propose mess up our system as far as the national debt is concerned?

[Cornfed]

Of course there would be inflation. Many ideas would be junk and not pay back the loan, so less stuff than money. More importantly, you don't address the issue of aggregate unwillingness to defer consumption without reward, which is the norm (other than during savings gluts). If no reward to defer consumption, no savings, hence every dollar created from thin air works be inherently inflationary because nothing to buy yet.

The stuff to buy would be the stuff businesses were spending the money on and subsequently the products and services they were offering. If a lot of the businesses failed then there would be less money to invest in the next quarter since the estimated economy would be of lower value and the people making the silly loans would lose their jobs. Savings would be and are now irrelevant. Something like this worked perfectly well in Nazi Germany where they based the money creation on the estimated value of labor, which was of course why they had to be overthrown.

[MrMan]

For corporations, taxes incentivize debt financing over equity financing. Much of our system is built on debt and interest.

[Moretorque]

A simple way to solve the problem would be for there to only be one bank owned by the government. They would make interest-free loans to people with money created out of thin air based on the estimated net value the project would add to the economy. Therefore there wouldn't be much money-generated inflation, since although there would be more money, there would be more stuff for money to buy. To have this you would have to have a government that had an interest in the country, rather than the current ZOG.

Of course there would be inflation. Many ideas would be junk and not pay back the loan, so less stuff than money. More importantly, you don't address the issue of aggregate unwillingness to defer consumption without reward, which is the norm (other than during savings gluts). If no reward to defer consumption, no savings, hence every dollar created from thin air works be inherently inflationary because nothing to buy yet. Governments can create money out of thin air only because mechanisms currente exist (primarily interest on debt) to reward savers for deferring consumption.

The only thing that actually works is to maximally replace debt with equity. Scheme i discussed above does that, but even simpler is to discourage debt without actually outlawing debt. Allowing inflation to run hot (5% or so) will chase people from cash (whivh is non interest paying debt). Carefully designed tax laws will chase them from interest paying debt to equity.

Bs, there was little inflation in the US prior to the Federal Reserve. You can do a mathematically perfected economy without interest to the banks. This is what the colonist were doing in the 1760's and this is why England declared war on the colonist. In communism they claimed they would get rid of the middle class through inflation and taxes, Mao stated in 1971 when Nixon got rid of what was left of the gold standard " we can now see communism coming into view " meaning communism is nothing more than a counterfeiting con job which it is. In the Muslim banking system if I am not mistaken you are allowed to charge fee's for the service but not interest because interest backs the entire system up with debt and transfers all wealth to the debt issuer's which is the communism con job. They tied the money to gold to try and keep this from happening so the state cannot just create unlimited money and rip the world off as they have out of the CITI of London who set this up world wide.

[Moretorque]

For corporations, taxes incentivize debt financing over equity financing. Much of our system is built on debt and interest.

That's practically all it is now, right after WW2 I was reading the US had 85% of the world's production capability and exported real stuff and now it is all financialzation through compound interest exporting debt all starting with the bond market. This has all been done on purpose, they waited for America to invent the modern world so they could use the tech to enslave all of us, they want the Chinese model everywhere and Winston has the balls to say China is a somewhat free country.

[MrMan]

For corporations, taxes incentivize debt financing over equity financing. Much of our system is built on debt and interest.

That's practically all it is now, right after WW2 I was reading the US had 85% of the world's production capability and exported real stuff and now it is all financialzation through compound interest exporting debt all starting with the bond market. This has all been done on purpose, they waited for America to invent the modern world so they could use the tech to enslave all of us, they want the Chinese model everywhere and Winston has the balls to say China is a somewhat free country.

Right after WWII, Germany and the UK had experienced bombings and Germany had invaded France. Japan had it's problems. The US had experienced the bombing of Pearl Harbor, but our factories were in tact. Much of the world was low on economic development. So the US had a huge percentage of productive capacity. But developed countries rebuilt more efficient factories. The Japanese listened to Deming and developed quality control. As the US patrolled the seas, shipping was safer under pax Americana, so many countries developed and grew richer through trade. So our percentage of productive output went down for those reasons.