Since, then your neighbor comes to you and would like to borrow three eggs. You know him well, so give him the eggs. You are now missing but the next day three eggs for breakfast, but for the friendly man you do that. The neighbor in turn, thinks, oh, how convenient, and is now permanently with such requirements. Then you will eventually no longer so friendly but should rather ask: I give you three eggs when I return next week for four eggs. The fourth egg is the reward that I must give three days on my egg.
Well, as the economist would say, the fourth egg is of interest that they make use temporary waiver for the benefit of another. It is also first did nothing wrong, and people have basically been done forever. Let's stay even with our eggs. Imagine, they are inhabitants of a village. So they exchange each other's products, three eggs for a loaf of bread for a half cans of milk, 144 loaves of bread for a goat, etc. pp. Also lend You ever seen the products of their chickens, so as described above about three eggs, which you then later four eggs, which bear interest, get back.
is also nothing wrong with it still. However, it is not very comfortable with a trade, the exchange of eggs in bread and bread to goat, etc., are quite complicated. Moreover, not every trading partner that what they want, or he will not have things to pay them. Worse, it may be that your trading partner at the moment, nothing has. He can only promise you establish that they eventually are four eggs, such as when his chickens are back healthy and happy. Or he promises you a service, such as your Hut soon again time to clean thoroughly.
also because there is not much to shake because you're all acting in services and in kind, which will inevitably consume more or less quickly, and somewhere in the same mutual claims in the course of the year again. Above all, no one can hoard these goods, because they are all very limited shelf life.
But wait! One of the things it is very durable, namely the promise. Because this is a matter of honor and it usually never expires. This is true even next year, when all the current eggs and bread have long since rotted away. If you are a very clever villagers now is able to see far outside the box, you will collect such promise. They are urging not even on their immediate redemption, on the contrary.
When her neighbor, who wanted to brush their hut, now back in pain, then they will say: Well, first it will recover, but I must wait so long, you need to twice clean my house. Have you noticed anything since? Namely, they now claim to eight eggs rather than just three! And her neighbor can not hoard its eggs or its work force to bring you this week to pay his debt at a stroke. He must on the contrary, soon his job performance, or better increase the egg production of his chickens, so he cope with a constant standard of living is. Or the promise he must once again extend to the price of a greater promise recently. Then you are already 16 eggs!
If you are really smart now, they do it with as many villagers and collect as many pledges as possible. And to make many promises are not forgotten, they write all on paper. What the less clever villagers did not immediately notice is that you eventually devolved to the permanent right to the entirety of the village is.
On the next village meeting you will, of whether to let your generosity grateful parishioners, of course, choose the mayor. All are long since become dependent on your goodwill. They will also not be so stupid to honor all the promises at the same time, but only as much of it that they can live well without even a chicken must beware. And the rest of the promises continue to grow because they do not expire, unlike the products of the community regularly and increase their production is limited to debtors.
The mutual promises of the villagers still have a disadvantage, they are closed between human beings. it might sell, of course, continue, for instance if you want to have a sack of flour miller, they give him for the promise of her neighbors about four eggs or a house-cleaning. All this is quite cumbersome, perhaps the miller wants something completely different than eggs or a clean stall. As mayor, it shall therefore first of all ensure that these notes are anonymous, meaning that you, eggs, bread, milk, goats, expected job performance, etc. in a common size and to write on the paper.
And as mayor, you also ensure that these documents are legal tender and you guarantee with the muscle-bound Village bailiffs to ensure that the commitments are fulfilled it also strict.
Now it is time for you to hammer a nail with a head. What they need now are banks. What use is it to you when the beautiful notes with interest the promised only to lie around and you have to wait for their redemption. The banks shall now ensure that these bonds are traded. For the chicken farmers, who would have to buy a new chicken is so hard to absparen of its eggs surpluses, which you can borrow the notes so well, against a further interest rate promise, so he or she be equal to a few dozen new chickens procured. From the fresh eggs they pay next year the couple of loose interest. And, more important, for the promised interest of other debtors now take their turn on interest rates. And now begins to hum their village economy really. Because you and the chicken farmers now earn both magnificent. Only the egg producer must now find more and more eggs for breakfast consumers to consume its growing surplus. Unlike your debt increase in the bank account but has the fundamental natural limits, but, first noted the long time still no one and you do not care anyway. For until then, they have long been underground.
So, the whole works first stunningly good, for all to make the example, increase the amounts of product and the consumption rate of your ever thickening villagers abkriegen as chicken keeper indeed what has also increased. The only thing growing are much faster, their assets and their popularity. Soon they set up monuments to them in the growing town and they have already draw a city wall around it, so the envious neighbors do not plunder their once quaint village.
All this costs money, and you need of course to collect taxes and establish a state bank. Now you hit a nail the last resolution: The State Bank They also the money monopoly, by simplifying the whole kindly Kladderadatsch: Instead of everybody is to blame personally signed certificates, issue new money every year, always something more than the growing economic power of their community would be actually worth. The
you can do because they are "priced in" the foreseeable growth next year already. This will later call the seignorage, and you can tear yourself first under the nail. If the economic output to fall but even then you would have to actually close down notes, but where would we be there.
The indistinguishability of the individual debt securities by the anonymous money to the generally underestimated but crucial, advantage that money and interest money can not keep them apart. This breaks the compounding effect his boorish way: How is doubled with only moderate 7.2% interest per year, a given sum in 10 years, as 10,000 eggs will be from 20 042. Without compound interest it would be against it "only" 17 200. But more dramatic is expected on a generation of 35 years: then it will already be 113 977, with no effect of compound interest, you can bequeath to your children, however meager 35 200 eggs promise.
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After 70 years it will have 1,299,077 instead of only 60 400 promises. The villagers would then have to Her grandchildren formally eggs "shit" in order to pay off the still. You must not, because it reaches you or your grandchildren out completely, if only muster all their work force to give them at least to pay the annual interest due. But this does not work much longer, because after another generation of your 10,000 eggs already legendary around 15 million eggs have become.
If that had known her neighbor with the three eggs, he would have forgone breakfast. Either way, that of its rural population can not keep up with these increases in principle. That's the bad news. The good thing is: Until then, all the villagers have long since forgotten why you are so rich and so awful lot of others so poor. Well, you guessed it, a promise you on paper called money. it properly Fiat Money, as the economist says, money which coverage is based solely on debt and publicly guaranteed. "This note is legal tender for all debts, public and private" is so clearly written on every dollar bill: This note is legal tender for all debts public and private. In particular a complete equality of debt is on the One, and balances on the other side.
This was not always so, for as the people against any hollow promises reluctant to trust, we would rather see a real value, ie copper, silver and gold coins, the metal value corresponded to the amount of the pledge. Because these metals have had and because of their relative rarity and technical usability, a real value.
Such metal currencies have advantages and disadvantages. The advantage is that because of the rarity of metals, the money supply can not grow indefinitely. The disadvantage is that you practically need in addition to the gross domestic product (GDP), a second addition to GDP of the precious metal industry. Also good for such money badly to pay for valuable products, such as a house.
Such was the time of Augustus, a Roman sesterces one ounces Copper, ie about 30 grams. But we got two loaves of bread. Converted to today's bread and house prices, ie, over five tons of sesterces for the latter would be due. Of gold pieces, the 8.2 gram Aureus, it would still be over 16 kilograms. Also is limited by the possible extension of the precious metal production is a fast growing economy very soon to a lack of money and deflation. The Romans always matched that of poorer quality of money. The heavy sesterces that had the equivalent of four aces disappeared. The Roman ace, from initially approximately 9 grams and about 25 mm in diameter, weighed at the end of empire was hardly an ounce and as small as a fingernail.
why you got some time to be officially on coins and paper money. The value was therefore more on this, hopefully credible promise of reducing the state that the owner would get paid in the coin or bill at the request of a certain quantity of gold or silver.
latter promises the Americans in 1971 finally threw overboard, as demanded by foreign creditors were actually large quantities of gold, which the U.S. had no more in the amount claimed. Since then, the dollar pure Fiat Money. And so the hoarding and proliferation are no fundamental limits to, quite the contrary, the gross domestic product. For the latter can hoard nor unlimited increase.
And so it was always the effect of the increase of money, which forced all the great empires to their knees. For this basic multiplication of money at the expense of GDP, the long-term devastating consequences: For the first at the end of development, because of the guarantee promise, only the owners of capital the full entitlement to the entire GDP of the creators, and also the assets accumulated more in the few, and largest, hands. As the Roman Empire collapsed in the fourth century, it was still rich and unrivaled technological leader by far, his best trained army in general. Only no one was there, the State apparatus, above all the military, yet could not pay.
For the super rich, it did not, and the population of Rome could not. The initial troop strength of the legions of 6000 men much towards the end of the empire to only 1,000 men, with most also foreign legionnaires, mostly Germans, were. Because especially the upper class, which traditionally provided the officers were not ready to take their pampered sons in the dangerous job to have, but bought themselves free from all duties. The decadent upper class was so rich that they'd let even Bill Gates than through the service entrance to the house. Many estates were there already so big that they were typically the size of the Saarland, North Africa was finally only six families.
toiling on the fields of foreign slaves, who were cheaper and had to be modest. Finally collapsed, GDP, the vagina money was not accepted, and again made the old natural economy space. The kingdom was at last become militarily vulnerable and was now occupied by the "barbarians" the Great Migration.
They were actually come to feast with the hope in a land flowing with milk and honey. And not to destroy it. Since there but nothing worked, you could just loot it yet. Here were the basic principles asset accumulation and its devastating consequences for the community have long noticed before Roman thinkers and politicians.
Thus already the brothers Tiberius and Gaius Gracchus, who wished to avert the collapse of the Roman Republic by a property reform. Tiberius was therefore 131 BC, and his younger brother 10 years later, murdered by the nobility. The Kennedy brothers send their regards. The result was a terrible, more than 100-year civil war of only 27 BC. led by the imperial dignity of Augustus reformed into a new era. And then after about 200 years back about the same point to arrive.
This Scheme can follow without much difficulty through the centuries, the English, French and the British Empire, they all died on the same virus that is historically mostly hidden by seemingly superficial military defeats.
Even the demise of the Soviet bloc 20 years ago is less freedom of will of the people for foreign trade in financial exhaustion by excessive debt, especially to lead back, which were equal to not more by its own weak GDP. And it is the virus which is the U.S. superpower in the foreseeable future, fall victim.
The whole has now but still an economic "Geschmäkle" Although these relationships, the merits, has long been known, they are ignored by the standard economics completely. In the usual textbooks of economics, the capital is only represent an external variable from which you can use halt loans for investment. A fundamental interaction at the beginning willed and positive, but which opens at the end of the development time in a drastically negative downward spiral that is simply negated. Of course there are always economists who urge the fundamental relationships, but these are hardly heard. The
is due to the fact that after the regular financial disasters as in the 1920s, the Weimar republic, the people are first with basic survival and then employed with the clean up and restart. And when you restart an economy like in 1948 after the currency reform, the economic miracle is so relaxed, especially thanks to a sound banking industry that no one would like to deal with the dangers that arise are typically two or three generations later. Especially because the credit business is at the beginning of an economy for all parties, a beneficial business. For an economy that grows only based on their own, usually invested in low, excess reserves, very slow or stagnant even at low levels.
The negative effect of the disproportionate accumulation of wealth on the other hand occurs much later in appearance and is also statistically by short-term economic fluctuations up and down easily made unrecognizable. is also criticism on the money system installed ideologically, at least since the philosopher and father of the Communist idea Karl Marx, his work "Das Kapital" written.
Any economist or even politicians, to the usual rules of the financial world expresses a fundamental critique finds himself, almost reflexively, from all sides to any accusation of equalizing socialism and communism, or subtle exposed to the accusation of envy politician. "... In the last seven years have seen an average each year to an international monetary crisis. Who benefits from such crises? Not the workers, not investors, not the true producer of assets. The winners are the international money speculators. Because they live with crises, they help to create crises. ... The strength of the currency of a nation based on the strength of their economy .... This action will bring us no friends among the international money dealers, but our concern is primarily the .. Workers and fair competition all over the world. ... I am determined to ensure that of .. never again will be a puppet in the hands of international speculators. "
Well, who probably spoke these words? No, it was not Marx or his compatriot
Erich Honecker, it was indeed the arch-conservative Richard Nixon as he in August 1971 in a televised address to Einlösepflicht terminates the gold backing the dollar.
The long-term trend to decline into a financial disaster is always the same. The duration of these phases can be estimated economic life is also good. It depends mathematically more complex and sensitive to the economic savings rate and the effective interest rate ps pv asset. As a rough rule of thumb for critical time when an economy gets into trouble is, Tc ≈ 3/pv. For Germany, the average effective interest rate was about 4.7% since 1948, so Tc ≈ 3 / 0, 047 = 64 years.
How we get around in the year 2012 as the critical date. So we are now again at a critical time of an economy with positive effective interest rate, which occurs with great regularity in every century.
