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Saturday, February 13, 2010

Centrifuge

>>"money spent on interest is money spent generating nothing; no revenue, no government programs, no jobs, no tax relief, nothing"

Not only that, but there's another downside- when a country with the world's largest economy develops a large and growing appetite for credit, this generates demand for people and institutions with capital who will lend to this government and collect that interest.

Both sides of the scale ( credit demand/credit supply ) must balance for the system to move forward.

So not only is productive capital being sucked out of the economy BY the government to pay the interest, but on the other side of the ledger, productive capital is being diverted out of the real economy to supply the nation's increasing appetite for credit.

Because the government is now applying new credit to service interest charges carried over from older borrowing, this trend feeds on itself. More and more capital is occupied inside the centrifuge of interest payments/interest collections/replenishment of credit supply.

Growing and compounding interest has a gravitational pull that segregates more and more capital away from the real economy of supply and demand. This is not 'growth', it's just a mindless cyclical rotation of money- more like a tumor than growth.

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