Money as Debt - Things That Fell Out of My Head — LiveJournal

So, there are Economics 101s that *don't*? I mean yes, they are more polite and formal about it, but the economists I've met take perverse delight in pointing out how nothing is what people think it is.

Well, it's definitely big, and definitely produced by collaborations between parties who have a (both literally and in choice of costuming) vested interest in most people not understanding how it works. The only thing that makes it not a conspiracy is that it's not illegal. Except oh wait, it might be. Technically. But perhaps not in practice.

As the first major update to Ripplepay, I've added the ability to charge interest on outstanding balances. Interest rates can only be changed with the approval of both account partners. Interest is charged per annum and compounded continuously. All existing accounts have their interest rate set to 0%. Let me know if you have any issues.

This is an interesting paragraph in light of the video's criticism of "usury". Without the interest, this is just a side system that circulates money-debt without creating more than is present in the effort people put in. If a lot of people charge interest, won't that eventually create more obligation than people are willing to cancel out with their effort?

Hmm, reading the essay, it sounds like the author of this video and ripplepay are mostly saying the same things.

That's fine, but what about the interest that is being charged on newly created money? No work was done.

yes, the *existence* of this new money as it is being created has some value to the system, but it seems to be slightly less than the amount of value that its existence removes from the rest of the system. Even if it's equal, it still implies an arbitrary (and well-hidden) transfer of wealth. (If it's truly greater, we should find a way to do as much of it as possible and give it to everyone, and we'll all be infinitely rich!*)

The argument that banks receive this grant as compensation for risk only works if there's collateral that the *bank* is risking, which is not the case!

I am struggling to find a shred of difference between this system and Enron's. So far, I got nothin'. (Which is also mostly what Enron had. Well, actually, maybe what Enron had was the unconscious belief that the government had granted it the some of its power to print money...)

Apparently, Enron's mistake was not having a standing military.


If someone can explain the current (international) monetary system adequately, we may be able to use that explanation to construct perpetual motion machines. Either way, it's worth figuring.

- Trip

* or is that the same as us all being infinitely broke?

by "newly created money", I mean the money that happens when you (person A) borrow money from a bank, deposit that money in another bank, and it is then (in part) loaned out by that second bank to someone else (person B). The money that person B now has doesn't come from anywhere. Or the original money you deposited is now in more than one place at a time, which amounts to exactly the same thing.

This property *not* being present in Ripple, and I assume that's a good thing, but I don't know enough to say for certain.

Alternatively, this suggests that whatever it is that's wrong with banks is also a problem with any other business, or that they have a different problem with a similar effect to it.

Maybe the fractional reserve system + FDIC translates to "I promise to have someone do 2 hours of work for you next week if you promise to do 3 hours of work for me the week after that, but I'll only actually do 1 hour of work and replace the other with a promise to have someone else do it, and you'll never get around to demanding that it actually gets done. But if you insist, and I can't deliver that promise, 100 people you don't know will have to give you a penny."

Be nice to it; it's been tortured and never quite recovered from the experience.

I went ahead and posted it hoping someone might be inspired to make a better one.

I'm sorry; I wasn't being clear that I was responding to your information about Ripple with speculation about the monetary system at large, not Ripple.

I guess they didn't include any history, then :P

and so you missed out on some of the implicit accumulated time value of money.

all this has happened before....