How are loans paid back?

Discussion in 'Economics' started by peets, Oct 21, 2008.

  1. peets


    I'm a kid who hasn't yet participated much in the economy; there's a few things I need to understand first.

    From what I gather, all money in circulation is loaned out from banks at interest: the lender must give back all the money they borrowed + some extra amount. If the only way to get money is to borrow from a bank, how will interests ever be paid? Everyone gets their money from the bank, so how can the bank expect them to give back any more money than they lent out?

    It's obvious to me that riches exist in different forms than "money": people mine gold, others invent things, etc. Do banks accept these sorts of riches as payment?

    If not, it seems there's a vicious cycle of borrow, borrow more to pay back, borrow even more to pay back, ... and that makes no sense.
  2. maybe i don't understand your question, but just curious how old u really are?

    i don't know why u think everyone borrows money, but how is this for an answer... instead of borrowing, get a real job and use your income to pay back the loan to the bank and get off the borrowing treadmill.
  3. Mecro


    You're smarter than 95% of the members here who can't understand the simple math behind the scheme.

    Borrow 100 in Federal Reserve Notes and have to pay back 100+5 (interest) in Federal Reserve Notes. The only way to get more Federal Reserve Notes is to borrow. Hence, a vicious cycle which benefits whom??
  4. peets


    I'm 22 and I have a real job. My employer pays me; he gets his money from whoever pays him, and whoever pays him... ultimately the money comes from a bank, right? No one (except banks) can pop out money out of nowhere, right?
  5. Surdo



    Where does the Federal Reserve get their money from?

    They print it!

    Go to the color copier@ your firm and make a two sided copy of a few $100 bills, trim it real neat and you got yourself a free loan, don't get caught!
  6. peets


    K I'm asking two thing:
    1. Do I have the right picture?
    2. If so, why is this expected to work?
  7. dve250


    It's called a Ponzi scheme and the US economy has been built on it from the start. It'd be tough to stop it now so we need to have our President, Treasury, and Federal Reserve keep pumping their monopoly money into the economy to delay the inevitable, whatever the hell that's gonna to be.
  8. You are on the right track.

    Its pretty troubling to find out the truth and even more troubling when you realize how few people know the truth.

    There is a ton of information available on this topic. To start try reading 'the creature from jekyll island' or watch 'the money masters' on DVD.
  9. Lucrum


    "How are loans paid back?"

    Wire Transfer
    Sexual Favors


    Renegotiated terms
    Skip town
    Leave the country
  10. Mecro



    You have to define what you mean by "work". Then you have to define for whom it is supposed to "work".
    #10     Oct 21, 2008