Thursday, November 20, 2008

If Milk Were Money...

Where Does Milk Come From?

If you think that money comes from your job, do you think that milk comes from your refrigerator?

Seriously. Think about where money comes from, not just where you get it. And it's not "The Fed just prints it up", (see below).

Money is not created when you "work for it". Instead, your employer just pays you some of what they already have; they got that when they captured someone else's loan principal by selling something (commerce).

If your job doesn't already have someone else's loan principal, that they captured through commerce (so called, "profit"), then they borrow some, to make payroll. So, you see, the money that you get paid, is not a loan to you, but it is to someone. Now, money only exists when it's borrowed.
When you get paid, the reason they can pay you is because someone upstream took out a loan. It's the way they do it now.
You personally may not be in debt, but someone is (even if it's "the taxpayer") for you to have money. At its genesis, money comes into existence at a bank, when a loan is made.
If they can't capture someones loan principal through commerce, or can't borrow (or won't, or shouldn't so they don't), and they don't get a bailout (ha), and the employees won't work for free, then the business goes bankrupt.

What happens when there are fewer loans upstream? Turn on the news right now. Everyone is talking about it. But, nobody in "the media" is talking about how to fix it (we do). Instead they want to "inject" the economy with "liquidity" and ease the "credit markets". Or they want to "borrow money from the taxpayer" for a "stimulus package". Or they want to see widespread business failures because they are sure that those greedy businesses have overspent. They may have, but that is a separate issue. The main problem is that all money is created at banks when that new money is loaned, at interest.

What if the cows loaned all the milk?
You would have to pay it all back, in milk, plus interest.
Impossible for everyone.

Milk? It comes from a cow.
Money? It comes from a bank when a loan is made.