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 Originally Posted by OngBonga
It eventually causes the collapse of the entire economic system. Watch this space. UK and USA, our economies are done, whether it be 1 year or 20. Our economies are on the brink of collapse because we're borrowing money to pay our interest. Our current government have spent more money than all our governments of the last century. That's austerity? No, that's compound interest. It is unsustainable. When you lend money to someone for interest, you are in effect creating money from thin air, which in turn causes a devaluation of the entire currency. That's assuming the currency is actually based on something, like gold. Of course, that's no longer the case. Capitalism has gotten to the point where our currencies are based on nothing more than the value we grant it. It's fiat. That's thanks to lending for profit. That's because we're printing money to create money. When you take a loan out from the bank, do you think thay actually set aside some gold? No, they just add some noughts to your account, and charge you interest. Money is created from thin air. That's why capitalism cannot sustain itself. That's why we're at war with shitholes like Syria and Iraq. That's why we've been at war for the last century. That's why capitalism is doomed to failure. Sooner or later the system comes crashing down.
I hope I'm wrong.
You're wrong because most of what you're referring to is the debt that states incur, which will come crashing down, I agree 100%. It's obviously a huge problem when a state runs a massive deficit for decades and passes the cost of paying that debt, with interest, onto future generations. But it isn't usury that causes this, it is the state that does. And when the state controls the money supply, they are able to pass hidden taxes in form of accelerated inflation.
I can debunk the claim that usury inevitably results in collapse by explaining in basic terms what wealth is. Wealth is essentially all of the accumulated stuff that people ascribe value to. Land, TVs, computers, raw materials, precious metals, candy bars, whisky, etc. Wealth is also all of the accumulated capital that exists in a society. As I stated before, capital is just stuff that helps to produce more stuff. All of the above can exist without currency, its just not as efficient to trade barter-style as it is to trade with currency.
Most of your paragraph is terminally flawed because of the belief that wealth and capital are somehow constant; that economics is a zero-sum game. That every economic transaction either benefits one person to the detriment of the other, or causes the two parties to break exactly even. This is simply not the case. It is a well-established and easily-proven fact that wealth can be created. That is why we have skyscrapers and billions of tons of food for everyone to eat when we had neither of these things a couple hundred years ago. It's also why there are currently about 40,000 commercial aircraft in the world and that number is expected to double within 20 years as more people will be able to afford to fly.
So applying this concept to currency and loans, here's a simple example. Suppose you have an idea to start a business, but no money to realize that idea. I, on the other hand, have a lot of money but no ideas. You come to me with your idea, I like your idea, and I offer to loan you 10 million dollars at 7% annual interest, based on my confidence that your idea is profitable enough that the 7% interest covers my risk that you will default on your loan, plus a profit. The profit is obviously there to cover my opportunity cost and time expenditure, as I could have used that 10 million dollars for a limitless number of other profitable endeavors. Now the decision is back on you: Is your business idea sound enough that the 10 million dollar investment will build equity for you for a return of greater than 7%? If yes, you accept; if no you reject or try to negotiate a lower rate.
Now if you accept, that when two parties agree to such terms, that it's quite likely that they both benefit in the long run from that agreement (probabilistically speaking, you'd say its >50% chance of this), then we're already most of the way to proving the statement that wealth has been created here. But you might argue that that your business will only survive because of products that you sell to consumers, and that those sales are exploitative to consumers. However, in each transaction with your consumers, what I just described is happening on a smaller scale; two parties, acting voluntarily to trade things with one another that you reciprocally believe is worth less than the thing you are receiving.
And this isn't even accounting for the extraction of resources, which continually adds wealth to a society. Those may be physical resources like ores, water, oil, and gas, but they may also be labor. Wealth is continually being created by all of the shit we do every day and all of the shit we pull out of the ground and put to work for us to make our lives more efficient and meaningful.
So to speak to the idea of money being created out of "thin air" whenever a loan is lent, yes that's absolutely true. But the loans are created based on the absolute increase of wealth that will result from what is done with those loans. The money in an economy has subjective worth, as you said it "is based on nothing more than the value we grant it." Yes, as with every single thing in the economy, individuals decide the value of it. This is the way it should be, since the value of no thing can truly be known. I'm sure typewriters were quite valuable before computers came out and became cheap. I'm also sure horses were quite valuable before automobiles were rolling out of assembly lines by the thousands.
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Question about fundamental societal construction
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