mardi 2 juin 2009

This is why jobs disappear!

This is why jobs disappear!

Imagine that you pick out a group of eleven people from society. Ten of these are businessmen who themselves, or together with others, work to produce a variety of products, each one within their specialized area. The eleventh is a person lending money to the others.

The money lender charges 10% interest (to simplify the calculations) on the money he lends. All businessmen borrow $2,000,000 each to cover expenses for purchase of raw materials, wages to employees, plus their own living expenses for one year. The whole amount of the loans is then used to buy from the economy, which in principle consists of all other businesses, people and institutions, including the sector financed by taxes. The economy has received a sum of $20,000,000.

To cover expenses, including interest payments, each of the businessmen has to sell products for at least $2,200,000. We assume that the lender buys products and services and pays taxes for a total of $500,000, which thus is funneled in to the economy. The market can then as a whole buy products and services from the mentioned group of businessmen for $20,500,000. But since each businessman has to sell $2,200,000 worth of goods, as a group they have to sell $22,000,000 worth. One or more of the businessmen will therefore not be able to sell products at the required level if the rest of the economy doesn't increase its debt by $1,500,000. At least one or more of the business owners have to file for bankruptcy or, if the lender agrees to it, borrow another $1,500,000.

The companies faced with the threat of bankruptcy have to fire employees and/or loose the collateral for the loans. This will be repeated year after year and more and more businessmen loose out, since all other groups in society will be affected by the same economical principal. It is the lenders, who already have more money than they need, who create a growing debt as soon as they do not buy products and services or pay taxes on their income from interest payments for the total amount earned.

It is therefore very important to think in new terms – we have to change to an interest free economy. This would benefit the largest group of the people while the existing system only benefits a small percentage of the population.

Per Almgren

From borrowers' purchases 20,000,000

_From lender's purchases 500,000_

To the economy 20,500,000

Purchases from the economy 20,500,000

Interest on loans -2,000,000

_Payments on loans -20,000,000_

Borrowers' deficit -1,500,000

Some introductory materials to the discussion topic of this list are at

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