interest exists for two fold reasons:
First, to counteract the negative effects of inflation.
And second, to counteract loans that default, or are otherwise unpaid.
In the 60s, about £5000 per year was a GOOD wage. A comparable wage nowadays would be ten times as much. So if I leant you £5000 in 1960, I would expect £50,000 back in 2012 (these numbers are estimates, I'm not looking up inflation statistics for an example.)
If I only asked for £5000 back, then I would be at a HUGE loss.
Remember, the true value of money is what you can do with it. Money is a go between for transactions. If items change value, or the amount of wealth a country has changes, then the value of the money MUST change as well to compensate.
However, there's also the possibility that I will never get my money back.
Say I lend £5000 to 10 people in 1960.
One of them never returns the money.
In 2012 I'll get £45000 back, but I'd actually be at a loss.
So I have to ask each of the 9 for roughly £556 extra to cover that loss.
Then there's profit to consider. If I'm going to be lending money, I want to be rewarded for my services.
However, I also want to reward people I KNOW will pay me back.
So if you have a good history, I can make the interest rate lower, so that I just break even with a small profit.
If you have a bad history, then I'm taking a gamble, and when you gamble, you expect a return equal to or greater than your possible loss, so the interest rate is much higher.
Of course, you KNOW this before I lend you the money. There'll be a contract that dictates the interest rate.
The contract we enter together is not some kind of theft. I don't need to lend you the money, and you don't need to accept. If you really have no way of making your money and need a loan, then I can draft whatever terms I want.
I repeat, it's a service, and they charge for that service.
In a perfect world, bankers do not ask for interest, and chefs wouldn't charge for meals, and every company and business would go broke overnight.
You're the one being naive not to see this.
Now, this is where it gets tricky.
The banks, when lending money, have to take ALL of this into consideration, and apply it to a LARGE population.
They have to work out what % of people will pay back on time, and which won't.
But the banks provide another service, they take in money as well, and gamble with it (according to their strict profit based rules) and then return that money (with a cut) to the people who put the money in.
Everyone wins, right?
Well, what if the large population were all asking for loans, and the returns look GOOD, but the bank doesn't have the money. Or any other kind of gamble. The system has always worked to this point...
But then the % of people paying back drops, which means the bank is at a massive loss, then the market is going to change (a change in money coming in and out of the market). This was housing loans, mostly.
So the bubble bursts. The money coming in is less than the money that's gone out. Prices go waaay up. And money is lost.
The money isn't gone, it's just tied up in loans which aren't getting paid back.
To recoop that lost, the banks have to turn interest rates sky high.
It's not enough.
The Government has to bail them out.
This situation is applicable for the name: Black Swan Event.
It is an event which you could not predict.
And event which you have to reason to believe would happen.
But in hindsight, it seems so obvious it would happen.
So people who read up on the topic think to themselves, How did they not see it coming?!
Because no one did.
No one predicted that the system which assessed risk would fail, and that less and less people would make good on their loans. No one predicted how this would affect the market.
A system which works 99.99% of the time, still fails just once, but that's all it takes.
QUOTE
Well hacking the phone of a murdered child and thus perverting the course of justice and hampering the police who were trying to find her.
#levenson
I'm not asking for individual crimes, though that is a nice rebuttal. Your argument was that they're all corrupt in some way, so what crime are they all guilty of? I'll concede that many of them do dubious things, but that doesn't mean we're involved in a corrupt system, simply that wealthy people commit more elaborate crimes than the rest of us. You're no more in a position to say "Oh, they're rich, they must be evil" than they are to say "Oh, they're poor, they must be evil". It's just baseless generalisation, and then you see something in the news, or a story of one of them. They see the family on the dole than slaps their baby off a wall, and they think, wow, the poor sure are corrupt and fucked up. Then we see a phone hacking scandal, and think, wow, the rich sure are corrupt and fucked up.
That's the music. Every social group will have criminals, it's just that the rich are usually more intelligent, and manage to get away with it more often, or at the very least commit more intelligent crimes. That doesn't mean they are ALL criminals though, simply for existing.
QUOTE
Mit Romny has in the last 12 weeks spent over $73,000,000 on his campaign.
Mitt Romney is an awful person, but there are no laws against being an awful person. In fact, the same goes for all of them. Like I said, our current market breed ferocity, it breeds a cruel and callous kind of people, but that doesn't make them guilty of anything other than being dickheads.
It really ticks me off, and I'm not accusing you of this, when some pot head who
thinks he knows what anarchism is, starts preaching to me about all the wrong doings of the rich, and I'm like "yeah, but what crime is that?" And all they can say is that they're guilty of being nasty people. Well fine, I know plenty of poor and nasty people as well, it doesn't mean the bourgeois should be dragged from their homes, it doesn't mean the government should be abolished.
There are PLENTY of legitimate arguments for abolishing our current economical and democratic systems. Arguments that take hundreds of pages to properly develop. Arguments born of the most powerful minds ever to exist.
John Stuart Mill's On Liberty outlines all the problems with our current system, and it was written in 1869. You read it, and you SWEAR it must have been written at least in the past century, if not even more recently. The book also proposes solutions to some of these problems, some of which are feasible, and some of which aren't. Nonetheless, an incredible insight into how to properly address the current system without a complete overhaul, and a reasonably argued one at that.
You'd probably like it.
And as a bonus, it's a hell of a lot more sophisticated than Marxist or anarchist supporters (I say supporters because I haven't read enough of Marxism or anarchism to properly judge them, though from what I have read, they are extremely well written arguments, that are misinterpreted by many who read them).
Still, if you want to talk corruption within Governments, you really don't need to look any further than what they spend the most needless amount of money on: The army (or defense in general). It is massively bloated, and they really do have more soldiers than they know what to do with. But if they cut the army down, then we'd have less people employed, which means no one would vote for whoever does it.
So we have a massively inflated army (in both the UK and US, probably everywhere) because it makes jobs and pretty much nothing else. The media then goes mad when a single soldier dies, because it reminds the public that we have an army, and that they die for us, and it makes the government seem sympathetic to their own waste.
None of it's illegal, and it's all done for the people. That's real corruption, because it's corruption that comes from the people and their blaming of the government for no jobs.
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Aug 14 2012, 12:01 AM
