Originally posted by th3dudeabides
Money=debt. When you understand what that means you will understand where all the "money" went.
I'd have to agree with him, and cluckerspud
Say there are 3 people. Bob, Tom, and Jim. They each have $100, in total $300.
Jim wants Bob to do some work on his house, but Bob charges $150. So, Jim borrows $50 from Tom. Now Jim owes Tom 50 dollars, Bob has $250, Tom has
$50.
The $300 is still there in Bob, Tom, and Jim's world (which would be the economy in this analogy) But there is $50 of debt. Say after interest that
turned into $75 of debt.
Now, Jim doesn't have any money. Luckily Bob has a bank. Bob loans Jim $150. After interest Bob will get back a total of $200. Jim pays back the $75
he owed Tom.
Now lets look at things.
Bob had $250, but he loaned out $150. Now he only actually has $100 in hand again, but is owed $200 from Jim. So in total, Bob is worth $300.
Tom has his $50 left over from the original $100, plus the $75 he got back from Jim. Tom now has a total of $125 in his pocket.
Jim, after paying back the $75 he owed Tom, only has $75 left of the $150 he borrowed from bob.
So look at that. There is really only $300.
But Tom has $125 in his pocket. Jim has $75 in his pocket. Bob is worth $300, because he has $100 but is owed $200. So because of debt that $300
turned into $500. But there was never $500 to begin with, only $300.
You keep this little scenario going and pretty soon there will be $10,000 going around, but that $10,000 doesn't exist, only the original $300. Debt
and interest "creates" money that was never there in the first place.
I realize this analogy falls short in MANY areas and doesn't touch on many issues currently affecting things. Hopefully it illustrates a simple fact,
that most of the "money" doesn't really exist. Debt and interest materialize money out of nothing. This grows the size of the economy, but it's
not really there.