About the mortgage and bank credits

I didn't have access to internet yesterday thus I am posting my article today.

But of course the whole system within the town can also get complicated because there are more and more people who are trying to find easy way of living by speculating on the exchange of wheat instead of focusing on growing their own wheat for their own needs. And for example person 2 knows that there is high probability that next year - due to the possible weather fluctuations - there will be shortage of wheat in the town and he decides to borrow a lot of bags of wheat from person 1 on the 5% conditions, he waits for a years and takes advantage of the adverse weather conditions and lends the wheat to people on the conditions of 20% extra on return and he makes for himself profit of 15%. Next year people return him the 20% and he has enough of wheat for himself and he sees that he doesn't need to work and grow the wheat himself.

Person 1 has already a good reputation in the town that he always has a lot of wheat. One day person 1 asks other people do something for him and he promises that whenever they need the bag of wheat, these people can come to him and get the bag of wheat as a pay for their work for him. But unfortunately something goes wrong for person 1 and he hasn't grown so much wheat as usual. And suddenly all the people come to him and ask for a wheat as a pay for their work. And here comes the problem because person 1 cannot give them the wheat and the people have not grown so much wheat this year because they have expected person 1 ( based on his good reputation ) to pay them for their work. And here we have a problem for many people because person 1 has promised something in the future which he doesn't have yet and thus takes a risk.

Now... although there are some difficult situations, the whole system is reasonably stable because people operate with real physical substance. In the situation of the system which is based on money there are much more complications because we are operating with something that is not real and it depends on the believe if its participants that this unreal substance ( paper and digits in the computer have value ). And because it is not real it is much more difficult control it and thus we have situations when banks borrow the same money to multiple persons and charge them interest on it. Apart from this the banks and people make many various and complicated transactions which are not real ( trading with the futures and options on the stock market ) which either gives them power to buy physical substance without putting any effort into growing it themselves and through this allowing the abuse of earth or they end up being completely broken and are forced to sleep under the bridge.

Now... although the system based on the exchange of the real substance is more stable then the system which operates with the money it has also his weak points. But the weak points don't really come from the system but rather from the people who want to have easy and comfortable life at the cost of others who work hard.

Avoiding the problems in both systems ( with real substance and with money ) would be very simple: we are one family and if I have excess of wheat I give it to those who have not enough without expectation of getting it back with extra benefit.

To be continued...



Published: 2013 - January - 05      © Copyright 2012 - Greg Wiater