I'm kind of confused about how interest works, can anyone clarify this for me? (details below)?
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The money is real once it is lent to you. In fact the banks hold millions of dollars from peoples savings accounts paying them 1% interest and then turn around and give you a loan for 15%. Seems like a nice commission for using someone elses money. But hey, the banks has to make money somehow right?
I'm kind of confused about how interest works, can anyone clarify this for me? (details below)?Banks were originally set up by the government, but now it runs as all other businesses do--as "ongoing concerns". They are in business to stay in business. It's all pretty basic accounting principals--they need to ensure that the money they collect exceeds the amount that they lend out. The money they are "lending" you is coming from the profits that they have secured through contractual agreements with other bankers.
I'm kind of confused about how interest works, can anyone clarify this for me? (details below)?Well, you are not really asking about interest, you are asking about how money was developed in the first place. For that you have to go back to when gold was used as a medium of exchange, way back in Biblical times. If you wanted to buy something, you would pull out your little lambskin pouch (condom) and pour out a quantity of gold nuggets. The problem with this was that gold is heavy, and if you were going to the marketplace to buy a lot of stuff it would be a real burden to lug it all around. So there developed the idea of the Warehouseman, who would take your gold and hold it for you, and in exchange give you a paper receipt. Now all you had to carry was a little piece of paper, and it was much easier to carry that than a heavy condom full of 50 pounds of gold.
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