Debt

Essence of Debt

Debt in a fractional reserve banking system (whether loans, business loans, credit card debt) works in quite an insidius way - and is a perfect example of We Are All in It Together.

Money lent is created from thin air, and is backed up by future productivity. Money created from thin air (banks, Federal Reserve) are the cause of inflation. This is favorable for the lender - as they get to create money from the thin air - with limited accountability for substantiating the value of that fiction on the part of the lender.

However, the debtor is quite complicit in this. Because by getting a loan (not a loan based on existing money, but a loan where money is created from the thin air) - solves their immediate need - but at the same time allows the debtor to be completely complicit in the creation of money from the thin air. It is not the lender who creates the money from the thin air - it is both the lender and the receiver. The receiver is on the line for creating value that justifies that loan. Both contribute to inflation - as the money supply grows.

Here is the insidious part: the lender is Scot-free.