The Political Measuring Stick

[ithink]

The only economics that requires complex math is bogus economics that use the complexity to hide the dishonesty.

Compund interest is what? 4th or 5th grade math? I'm not too shabby at math, or logic (state debate team back in the day, 10+years of computer programming as my primary career (almost all for the banking industry btw.) and I have a couple of the best (high school) mathematicians in the state at my beck and call to check anything that gets too complicated for me. But I say again, even implying that some kind of math genius is required to understand interest? Please.

See my spreadsheet. The problem we're dealing with is that we're trying to illustrate a system, but the system doesn't work. It's not that the math is bad, it's wrapping our minds around the fact that the system is broken. If you like the high end stuff, go to MPE and download their modeling program. If not, look at his spreadsheets and the one I posted, which anyone can understand.

[Original_Intent]

I've started reading "The Majesty of God's Law". There is a section regarding interest which I thought was applicable and I agree with.

Interest should not be charged on money lent to the needy. (This also seemed to imply that the needy should try to repay charity given to them if they can.)
Money lent for business ventures, there is nothing wrong with interest, and rates can be whatever both parties are willing to agree to. The text did mention usurious rates, but didn;t necessarily condemn them. Some ventures may be riskier than others, and certainly if there is a high risk that an investor could lose everything, expecting a higher return in the case of success is correct principle. (not to mention that the borrower may need to offer such higher rates to attract someone willing to lend.)

What we call consumer lending probably should not exist at all, except in the cases of providing for those in need.

And if you are saying that the governmentor its agents should not lend money into the economy (i.e. the money is created as debt) I agree with that, as that is the mechanism used to create money out of nothing. Money should always take effort to create, as that is the only way that it can be a fair exchange for other goods and services that also require effort to create. No man can or should be trusted with the ability to create fiat currency.

[ithink]

I've started reading "The Majesty of God's Law". There is a section regarding interest which I thought was applicable and I agree with.

Interest should not be charged on money lent to the needy. (This also seemed to imply that the needy should try to repay charity given to them if they can.)
Money lent for business ventures, there is nothing wrong with interest, and rates can be whatever both parties are willing to agree to. The text did mention usurious rates, but didn;t necessarily condemn them. Some ventures may be riskier than others, and certainly if there is a high risk that an investor could lose everything, expecting a higher return in the case of success is correct principle. (not to mention that the borrower may need to offer such higher rates to attract someone willing to lend.)

What we call consumer lending probably should not exist at all, except in the cases of providing for those in need.

And if you are saying that the governmentor its agents should not lend money into the economy (i.e. the money is created as debt) I agree with that, as that is the mechanism used to create money out of nothing. Money should always take effort to create, as that is the only way that it can be a fair exchange for other goods and services that also require effort to create. No man can or should be trusted with the ability to create fiat currency.

You make some good points and people would be tempted to compromise.

The critical point would be to ensure that the amount the bank creates is equal to the amount that is owed when loan is due. So if you were to say, I want 1% of the loan as a fee, I would say calculate that into the principal at the start and lend that to the person as well. Then the "interest" isn't really interest, it's a fee. I have no problem with fees. Fees are like your boat analogy, you get paid for the use of your boat, or raft. In this case there is no raft, but there is a cost associated with staffing a bank to perform this function of converting peoples promises into currency they can spend in the economy. This is moral and ethical, and legal. The incentive to work is still there, and since the majority of money is no longer going to the bankers, the economy can be sustained at the status quo level. This should please all the green planet lovers as well, since unless the economy is sustainable, the planet will be under ever increasing pressure to comply and since nature cannot sustain any exponential system (remember the bacteria), it will be destroyed if we don't stop what we are doing.

Keep in mind though that if you allow interest, it won't be long before compound interest creeps in again. If it's all bad, the let it all go. Nice reference to Skousens book, thank you, I was not aware of what it was saying on interest.

[Teancum-Old]

Alright, you asked for it. In the spreadsheet, you will see that there is not enough money in circulation to pay the debt incurred by Mr. Smith.

I did your grade 5 math in the spreadsheet above. Read it and weep.

Good. Now the only problem is that while this may include grade 5 math, it also takes bookeeping/accounting skills to understand this spreadsheet. While I definitely am capable of grade 5 math, understanding the logic of bookeeping is not my thing and most people don't know anything about bookeeping unless they put the effort into studying it. How an debit can be associated with an asset and how a credit can be associated with a liability is beyond my humble brain. I admit my weakness. But nice try, this is not purely grade 5 math so don't call it so any longer.

The example about the raft was simple enough for grade 5 math (and no need for bookkeeping skills) but you avoided debating that one here:

Let's break OI's example down to a simple raft. Now I can build a raft from wood that I've chopped and gathered. I can use that raft to take my furs to a nearby town, down the local river, to trade. If I want to rent out my raft to someone who believes they can profit using it, so be it. I build another for my own use. I rent it out the first and make money from my investment. Of course, these earnings were not from sweat directly from my brow. Never had to go to a bank to borrow money on interest for this. Labor has value. My labor building the raft reaped me profits later on. Not everything has to start with a loan.

Not anymore. You can't go to the bathroom without permission from the government. And with what did you chop your wood? And is your example relevant to our modern world? You might as well be on the moon smacking two rocks together.

You may claim that this example is not "relevant to our modern world" and state that I "might as well be on the moon smacking two rocks together" but that does not take away the fact that my labor alone can generate wealth. I don't have to request a loan from an all-powerful, corrupt banker in order to survive. Therefore, a loan can be paid for, interest, principal and all, by my labor. Thus paying off interest is mathematically possible and is not inherently evil. Besides, if all havoc does in fact wreck the world economy soon, as most of us agree (due to wickedness and corruption), then my scenario about raft building won't be to far out of line, will it? Regardless, the point is that LABOR GENERATES WEALTH, not loans.

I believe the original scenario with 10 people (one of which was a banker) also showed how labor can payoff wealth (those in debt can provide services through their labor to the banker). Although such examples may be claimed as unrealistic in today's economy, fact is that they are possible if our economy tumbles down to shambles. And in order to get at the core of these economic concepts, simplicity is necessary (or else we get bogged down in all the complexities). These scenarios both show how labor generates wealth and can pay off principal plus interest on loans.

ithink, it appears that you believe all loans TODAY are evil? If this is the case, do you believe the Church today does not participate in any business deals involving loans with interest? Sure, the Church pays most everything in cash, but I believe it also uses interest to its advantage in investments. President Grant was a profitable businessman too. Are you going to go so far as to say that he did not use interest to his advantage??

I simply cannot subscribe to the idea that all loans with interest are evil. The problem is when those loans are used in a wicked manner (25% interest charges are required by evil individuals!!). Interest is not evil; mankind makes it evil.

Lastly, you failed to prove your claims, as noted below.

You say "Compound interest is the god of Abraham's idolatrous father," I say prove it. Prove? My history book says compound interest originated in Ur of the Chaldees, right when Abraham and his father were alive. Maybe your history book says otherwise, but that is what I read. Again no proof offered.You say even commodity-backed currency "will all be destroyed in the end," I say prove it. See above spreadsheet Your spreadsheet assumes we understand bookeeping. I, for one cannot follow it. Will need some help. Sorry.
You say "the math screams out that... the system [that employs interest] will still fail." I say prove it. (I think I can handle the math ) See above spreadsheet. See response above. You say the Kirtland Bank "did not include compound interest," I say prove it. Joseph was put up on charges of printing "unauthorized paper money". Why would Joseph Smith be so stupid to just print money? Isn't that just evil? Again no proof offered.

[Teancum-Old]

I've started reading "The Majesty of God's Law". There is a section regarding interest which I thought was applicable and I agree with.

Interest should not be charged on money lent to the needy. (This also seemed to imply that the needy should try to repay charity given to them if they can.)
Money lent for business ventures, there is nothing wrong with interest, and rates can be whatever both parties are willing to agree to. The text did mention usurious rates, but didn;t necessarily condemn them. Some ventures may be riskier than others, and certainly if there is a high risk that an investor could lose everything, expecting a higher return in the case of success is correct principle. (not to mention that the borrower may need to offer such higher rates to attract someone willing to lend.)

What we call consumer lending probably should not exist at all, except in the cases of providing for those in need.

And if you are saying that the governmentor its agents should not lend money into the economy (i.e. the money is created as debt) I agree with that, as that is the mechanism used to create money out of nothing. Money should always take effort to create, as that is the only way that it can be a fair exchange for other goods and services that also require effort to create. No man can or should be trusted with the ability to create fiat currency.

Good catch OI. I am also going through the same book. I think Skousen has it right; interest should have everything to do with assessing risk.

Creating money from nothing is evil. Hooking consumers into massive debts and then charging outrageous interest is evil. But, interest is not inherently evil. Depends how it is used.

[Teancum-Old]

Nice reference to Skousens book, thank you, I was not aware of what it was saying on interest.

So ithink is not completely PIP after all! :ymparty: Great to see ithink did learn something from this thread after all! Now I wonder if he would give me some training on bookeeping... For the life of me, I cannot understand how an asset can be both a credit and a debit and ...... )

[Jason]

Nice reference to Skousens book, thank you, I was not aware of what it was saying on interest.

So ithink is not completely PIP after all! :ymparty: Great to see ithink did learn something from this thread after all! Now I wonder if he would give me some training on bookeeping... For the life of me, I cannot understand how an asset can be both a credit and a debit and ...... )

Debit is where the cash is.....Credit is where the cash came from.

You buy a house with a loan.....the value of the house is a debit on the balance sheet......and the value of the loan is a credit. The cash is tied up in the house (debit) and you obtained the cash via the loan (credit).

Debit card - payment via money in the bank.
Credit card - payment via money from a loan.

Its not entirely perfect (receivables/payables) but at least that's what helped me keep it all straight when I started down this path.....

[ithink]

For Teancum.

If anyone can improve on my bookkeeping, or if anyone is an accountant or trained in economics, feel free to work on that speadsheet. I received an A in accounting in school years ago, but that was a long time ago.

A credit on a liability account actually increases that account, while a credit on an asset account increases it. Debits and credits increase the account or decrease the account they are in depending on what type of account they are. Think of your credit card. When you deposit money to it, the balance goes down because it is a liability.

So right, this is not longer grade 5 math.

Yes, you can work and create wealth with your labor, but unless you convert that wealth into dollars, you're stuck. And you can't get dollars without a loan. And as soon as there is one loan -- even one single loan with interest, it is impossible to pay off unless the banker starts taking goods in kind as payment, but they currently don't.

The only reason the church can pay anything in cash is because other people have taken out loans. It wasn't always like that though. What is now the Joseph Smith memorial building used to be the Hotel Utah, and that was paid off with a loan from NYC for a million dollars. The loan itself was paid off by putting a bar in the basement of that building -- apparently the largest in the west. And the proceeds from that drinking establishment were used to pay off that loan.

Compound interest is one of the devil's most powerful instruments. It's devastating influence will one day be made known to us all, and if I can't do that for you today, someone else who is more eloquent will do so eventually, either in this life or the next.

I can't prove anything to you Teacncum. I've given you answers, if you want to prove them or even disprove them, you are welcome to do so. Concerning the this issue of compound interest though, you would do well to know that the proof that the system is terminal has been public for at least 25 years, and has not been disproven.

[ithink]

Nice reference to Skousens book, thank you, I was not aware of what it was saying on interest.

So ithink is not completely PIP after all! :ymparty: Great to see ithink did learn something from this thread after all! Now I wonder if he would give me some training on bookeeping... For the life of me, I cannot understand how an asset can be both a credit and a debit and ...... )

Debit is where the cash is.....Credit is where the cash came from.

You buy a house with a loan.....the value of the house is a debit on the balance sheet......and the value of the loan is a credit. The cash is tied up in the house (debit) and you obtained the cash via the loan (credit).

Debit card - payment via money in the bank.
Credit card - payment via money from a loan.

Its not entirely perfect (receivables/payables) but at least that's what helped me keep it all straight when I started down this path.....

Right. If you also look closely at the spreadsheet, you'll see that the bank ends up with a transfer of the original $100K promissory note with no corresponding entry in the ledger of the borrower. This is where the money exchange fraud takes place originally, because at the end the bank should return your promissory note back to you UNMARKED. How is this? Imagine you come to me to borrow $5000. I say yes, but i need collateral. I want your truck. As soon as you disappear out of sight, I sell your truck and give the $5000 fom the sale back to you as the loan. After the loan is paid back to me, you will naturally ask for your truck back but as we can see, I sold it to turn out the loan. Same as the bank, they "sell" your promissory note, but it's not theirs to sell. Like the truck, it's yours. Ask them if they should not give it back to you unaltered.

[Teancum-Old]

For Teancum.

If anyone can improve on my bookkeeping, or if anyone is an accountant or trained in economics, feel free to work on that speadsheet. I received an A in accounting in school years ago, but that was a long time ago.

A credit on a liability account actually increases that account, while a credit on an asset account increases it. Debits and credits increase the account or decrease the account they are in depending on what type of account they are. Think of your credit card. When you deposit money to it, the balance goes down because it is a liability.

So right, this is not longer grade 5 math. Good, the truth comes out. This is accounting not grade 5 math.

Yes, you can work and create wealth with your labor, but unless you convert that wealth into dollars, you're stuck. And you can't get dollars without a loan. This is where I take issue. I can trade (yes barter) with anyone who wants to deal with me. This may be living on the moon-type economics but it was practiced before here on earth. Gold and silver could also be used by their weight so no dollars would be necessary, therefore no loan. Again, my labor creates wealth. I can dig up gold/silver/etc, use it to buy tools, to build a raft, rent it out, build another raft with my gold/silver/etc, and use my profits to loan some gold/silver/etc with INTEREST for someone else to build their own raft. No loan with fiat money necessary for me to get started though. And as soon as there is one loan -- even one single loan with interest, it is impossible to pay off unless the banker starts taking goods in kind as payment, but they currently don't.

The only reason the church can pay anything in cash is because other people have taken out loans. It wasn't always like that though. What is now the Joseph Smith memorial building used to be the Hotel Utah, and that was paid off with a loan from NYC for a million dollars. The loan itself was paid off by putting a bar in the basement of that building -- apparently the largest in the west. And the proceeds from that drinking establishment were used to pay off that loan. I have heard about this. I believe the Church was forced into that position due to its huge losses/debt incurred trying to remain faithful to plural marriage. Don't know much about the drinking establishment and how that was exactly put into place though.

Compound interest is one of the devil's most powerful instruments. It's devastating influence will one day be made known to us all, and if I can't do that for you today, someone else who is more eloquent will do so eventually, either in this life or the next. You have not convinced me yet, and if it takes an accountant to figure out the logic, then it may take me long time to come over to your side on this issue. For the life of me, I don't know if I ever will be to keep debit/credits straight... Accounting seems so subjective.

I can't prove anything to you Teacncum. I've given you answers, your claims about Abraham and interest, or the Kirtland Bank have come without any evidence to support; your only real answer was a spreadsheet which was based completely on accountant level math/vocabulary (not grade 5 math as you always asserted) if you want to prove them or even disprove them, you are welcome to do so. If I were an accountant; for now I am just a lowly engineer. Concerning the this issue of compound interest though, you would do well to know that the proof that the system is terminal has been public for at least 25 years, and has not been disproven. We all agree the system is terminal and that the banking industry is completely corrupt and rotten to the core. We are on the same page there! At the heart of the issue is interest. Is it inherently evil, thereby clearly the culprit of our terminal economic situation or is interest only a tool that can be (and has been) used in evil ways, where the real culprits are corrupt individuals? I believe it is the latter. On this we can agree to disagree until I learn accounting or you can prove your case clearly to non-accountants.

[ithink]

For Teancum.

If anyone can improve on my bookkeeping, or if anyone is an accountant or trained in economics, feel free to work on that speadsheet. I received an A in accounting in school years ago, but that was a long time ago.

A credit on a liability account actually increases that account, while a credit on an asset account increases it. Debits and credits increase the account or decrease the account they are in depending on what type of account they are. Think of your credit card. When you deposit money to it, the balance goes down because it is a liability.

So right, this is not longer grade 5 math. Good, the truth comes out. This is accounting not grade 5 math.

Yes, you can work and create wealth with your labor, but unless you convert that wealth into dollars, you're stuck. And you can't get dollars without a loan. This is where I take issue. I can trade (yes barter) with anyone who wants to deal with me. This may be living on the moon-type economics but it was practiced before here on earth. Gold and silver could also be used by their weight so no dollars would be necessary, therefore no loan. Again, my labor creates wealth. I can dig up gold/silver/etc, use it to buy tools, to build a raft, rent it out, build another raft with my gold/silver/etc, and use my profits to loan some gold/silver/etc with INTEREST for someone else to build their own raft. No loan with fiat money necessary for me to get started though. And as soon as there is one loan -- even one single loan with interest, it is impossible to pay off unless the banker starts taking goods in kind as payment, but they currently don't.

The only reason the church can pay anything in cash is because other people have taken out loans. It wasn't always like that though. What is now the Joseph Smith memorial building used to be the Hotel Utah, and that was paid off with a loan from NYC for a million dollars. The loan itself was paid off by putting a bar in the basement of that building -- apparently the largest in the west. And the proceeds from that drinking establishment were used to pay off that loan. I have heard about this. I believe the Church was forced into that position due to its huge losses/debt incurred trying to remain faithful to plural marriage. Don't know much about the drinking establishment and how that was exactly put into place though.

Compound interest is one of the devil's most powerful instruments. It's devastating influence will one day be made known to us all, and if I can't do that for you today, someone else who is more eloquent will do so eventually, either in this life or the next. You have not convinced me yet, and if it takes an accountant to figure out the logic, then it may take me long time to come over to your side on this issue. For the life of me, I don't know if I ever will be to keep debit/credits straight... Accounting seems so subjective.

I can't prove anything to you Teacncum. I've given you answers, your claims about Abraham and interest, or the Kirtland Bank have come without any evidence to support; your only real answer was a spreadsheet which was based completely on accountant level math/vocabulary (not grade 5 math as you always asserted) if you want to prove them or even disprove them, you are welcome to do so. If I were an accountant; for now I am just a lowly engineer. Concerning the this issue of compound interest though, you would do well to know that the proof that the system is terminal has been public for at least 25 years, and has not been disproven. We all agree the system is terminal and that the banking industry is completely corrupt and rotten to the core. We are on the same page there! At the heart of the issue is interest. Is it inherently evil, thereby clearly the culprit of our terminal economic situation or is interest only a tool that can be (and has been) used in evil ways, where the real culprits are corrupt individuals? I believe it is the latter. On this we can agree to disagree until I learn accounting or you can prove your case clearly to non-accountants.

We're covering the same ground here again, maybe it's the length of this hijacked thread. Alas.

1. Dig all of the gold out of the ground you wish, but if you can't convert it to paper money, you can't buy milk and bread, and most importantly you can't pay taxes. And of course, all paper money is issued as debt instruments BEARING INTEREST. Needless to say all gold backed currency is BEARING INTEREST also, so you're still screwed.

2. Accounting may be subjective, but bookkeeping is not. It is totally 100% objective.

3. At it's heart, it's grade 5 math.
TRUE 1 + 1 = 2.
TRUE 1 + (1*1.03% interest) <> 2.

Can you disprove that? If not, you've uncovered the root of the problem.