The death spiral of our economic system

The picture below briefly summarizes the current monetary system and its insoluble problems.

As long as people do not understand that banks in our current economic system create money in the form of debts to individuals, companies and governments, on which interest must be paid to those same banks, then we will get nothing further with the economic crisis.

Money is created by banks as debt and this causes us untold problems BUT it doesn't have to be this way, we can change it but we need people to be talking about it. Find out more: http://www.positivemoney.org.uk/

After 4 years of crisis, you would almost expect that politicians and the mainstream media in the Netherlands and Europe should gradually understand this. What politics in the Netherlands is now actually doing is trying to cut the interest that has to be paid on a mountain of debt created out of nothing by banks in the real economy. That's nothing short of economic suicide ...

Amazing that this question has never been asked in the 2nd room or in a mainstream media program. Our government and the European Central Bank are currently working on B, C and D because they either do not understand or do not want to admit that answer A is the right answer.

And these measures, if you understand the system, can never work, the system can only survive by incurring more debts… on which even more interest has to be paid to banks. And the longer we keep going in this current system, the more misery we get for the common people. And the more profits for the banks ...

The more debts, individuals, companies and governments have, the more interest the bank receives and the more power banks have over those individuals, companies and governments.

Take Greece as an example. As long as the Netherlands continues to enter the same deadly economic spiral, from which only the (inter) national banking cartels benefit enormously, the Netherlands will face exactly the same future as Greece. So inform the mainstream or 1% media, politics, but especially your own family, friends, colleagues and acquaintances about how the problem of our economy arises from the system itself and that we need a system change. Until we get to the heart of the problem, we will remain stuck in this dire crisis and it will only get worse. However, politicians seem to be more interested in who can cut back the economy in which way instead of having an overview and tackling the actual problem.

Related information and articles
-) 800,000 people with residual debt in the Netherlands
-) How fair is our current economic system really?
-) Problems with our money system
-) Dutch family challenges the banking system
-) Dutch family challenges the banking system in Part II
-) Awareness about the banking system is growing worldwide 

161 thoughts on “De doodspiraal van ons economische systeem”

  1. Every country is betting that exports (or foreign spending in its own country, such as tourism) will generate the necessary capital with which to reduce government debts. In concrete terms, it comes down to the idea of moving the interest burden abroad (they must therefore become even more indebted). In the back of your mind also plays a role that there will be losers. And of course it is hoped that those irrecoverable debts will hardly harm their own banks and investment funds. These are a kind of remediation in which the winner (s) naturally imposes requirements (the right to mine raw materials on someone else's territory, opening up the land for our products, etc.).
    The duration of these processes is at least decades. So then it is soon: after us the flood ... 

  2. Now these links came to me, which have also been sent to me before through other channels and could perhaps be brought to your attention here. It embraces a plan to actually nationalize the whole system and put the entire private banking cartel out of the game if I understand correctly. 

    IMF's epic plan to conjure away debt and dethrone bankers
    So there is a magic wand after all. A revolutionary paper by the International Monetary Fund claims that one could eliminate the net public debt of the US at a stroke, and by implication do the same for Britain, Germany, Italy, or Japan.
    http://www.telegraph.co.uk/finance/comment/9623863/IMFs-epic-plan-to-conjure-away-debt-and-dethrone-bankers.html

    IMF Working Paper, The Chicago Plan revisited
    http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

    I'm curious what others think of these plans here.

    1. The solution is so simple and has been going on for a long time, but apparently nobody realizes it.

      Pay in fiat currencies that can be printed indefinitely and save in currencies that cannot be printed indefinitely. The more fiat currencies that are printed, the more valuable the currencies that are not printed.

      Problem solved permanently.

      1. But then the question is who is allowed to print the fiat currencies and through what mechanism can we ensure that we do things with them that are best for the survival of people. 

        A kind of internet democracy in which the people themselves set the priorities, as it were. For example, providing the whole of the Netherlands with renewable energy and recycling raw materials as much as possible and harvesting raw materials from the sea? 

        It seems more useful to me than leaving that money creation mechanism with banks that make a housing bubble with it and put many tons of salary in their pocket. :-)

        1. 1. In communism and socialism money creation lies with the government

          2. In the social democracy, money creation lies with the banks and the government has unlimited borrowing.

          A choice between the plague and the cholera seems to me ...

        2. A choice between the plague and the cholera seems to me ...

          Haha I totally agree, therefore the question whether you know anything better.

          I totally agree that it is a great solution that you would save in gold and silver and also create a currency like debt. I had to think about it for a while, but it seems very sensible to me. But we haven't solved the problem with that. This only insures individuals against hyperinflation. An important function of a good money system is that as many people as possible use their labor, knowledge and raw materials to build a world that is as good as possible for the survival of itself, others, humanity, mother earth, etc.  

          Through what mechanisms is the fiat money created in this system that you propose and who have those rights there? Can we not arrange that in a way that there is no longer a centralized monopoly on this by either a government or a private banking cartel. That we can have this done in a decentralized manner and per person or community… That the people, instead of the banks or a central government from Brussels and Frankfurt, decide where the people's labor goes and what goals and things are achieved with this? 

          Any idea about this? 

           

        3. The funny thing about freegold is that it no longer matters who creates the means of payment, as long as they are freely exchangeable for the gold saving means.

          In principle, you could also create means of payment as long as they are exchangeable for gold. Your currency is then valued against gold every quarter.

          http://en.wikipedia.org/wiki/Freegold

          Once you understand the principle of freegold, you will see where we are now, what the solution is to the debt crisis and how we proceed.

          euro = freegold

  3. "After 4 years of crisis, you would almost expect that politicians and the mainstream media in the Netherlands and Europe should gradually understand this."

    Well, this is exactly where the shoe pinches… ..
    The meanstream media has long been in the hands of corporations.
    It is precisely the politicians in the Low Countries and Europe who represent the interests of the banks and industries.
    We citizens are being held hostage by our own politicians, that is the reality. 
    'Europe' was created, not for the benefit of its citizens, but for the benefit of cartels in the banking and industrial sectors. This is genuine fascism! 

    I recommend that everyone check out Dr. Rath to watch “EU Political Perspective, on youtube. His presentation of just over an hour will show you that the creation of Europe is anything but a civil initiative ...

    1. was my idea too! totally agree. In other words, banks are back in the hands of the government, because that way money can no longer be made with money. And that is as it should be

  4. A question that I ask myself is the following: how can one as a “visionary” try to create something within the current economic system that is in a death spiral? I don't think it would be very useful to plunder all my credit cards like Steve Jobs, put myself in debt and live on the verge of bankruptcy in the current situation. 

  5. I am in favor of regulations: that way the transition to 'excessive lending' cannot occur and money creation does not necessarily lead to a death spiral. For example, I do not think that the crisis is only due to the banks, but certainly also to the governments.

    1. It's a system error Tom. It takes exponential growth in debt to keep the debt system going.

      There is no brake ... Pyramid scheme you understand?

      And yes, politicians have knowingly allowed this.

  6. Can someone perhaps answer this: is fractional banking actually permitted by law in the Netherlands? or is this tolerated?
    I mean, in particular, creating money from nothing and then also lending this money at interest.

    1. This is fully permitted by law in the Netherlands. It also certainly has certain advantages, because it is a good thing, we are now entering a period in which the disadvantages are discussed more strongly. :-)

        1. Hello Jan, 

          Maybe you mean the Jerome Daily case? That is correct idd, but that was mainly due to the fact that he said that the bank does not actually deliver anything when he took out a mortgage.  

          You can find this story in the links below this article
          -) Dutch family challenges the banking system

          But that is different from fractional reserve banking itself being illegal. 

           

    2. Sorry Ruud, but I do not understand anything about this.

      Isn't money created by the bank in fractional banking?
      This means that they thereby make a claim on labor and / or property.
      In addition, interest is also charged on the loaned money.
      I can understand the latter if you necessarily want to choose to maintain the private banks, because then one can recoup the costs and make a profit through that interest (although I am in favor of rejecting the entire private banking system. purchase, but well that's another discussion)

      That newly created money is what matters to me. Explain to me, without your website, how that actually limits money creation

      1. The counterpart of fractional banking is full reserve banking. With full reserve banking, only the money of the savers is offered for credit and no extra money is made up.

        The money supply remains the same, only each unit of money increases in value as the credit is used for investments that grow the economy. In order to keep the purchasing power per unit of money the same, it can be decided to create more money and lend it out for investments.

        The economy is growing slowly but steadily and the currency maintains its value without the well-known boom / bust cycle. This is the capitalist model.

        In the Social Democratic model, money from nothing is used creation to artificially stimulate the economy. Politicians can promise jobs and benefits and bankers earn the scales of their eyes because they can create almost unlimited money / debt. The earth is being raped, the environment is diseased and it always ends in a complete collapse of the currency and artificially created economy after which war is most likely. 

        From the government debt meter you can clearly see when we switched from the capitalist model (save first, then invest) to the social democratic model (borrow and consume) 

        http://www.destaatsschuldmeter.nl/

        1. This article remains a gem Douwe, and should be on every front page of every newspaper and magazine.

          Compulsory learning material for young and old.

        2. Personally, I prefer that it ends up in every inbox of family, friend, enemy, acquaintance or colleague :-) 

          I myself have completely lost faith in the mainstream media in terms of honest and objective knowledge so I think that spreading this should be done by people themselves. All mainstream media already received this from the occupy when it came out and except for a single acknowledgment of receipt, none of it ever appeared in print. So we should not have these clubs, although everyone is free to send it to the editors of local media again, perhaps repetition will help? 

  7. Interest on the fractional part alone will not work… Banks will therefore no longer lend extra money because it does not yield anything. The disadvantage of this thinking is that there is no more growth! This system is just hopeless, with the banks having a monopoly.

    Fractional part should be with the banks and the remainder needed for “growth” with the government. In this way, the money does not just disappear to the super rich who own the banking system.


  8. Part of a piece written by me for Entrepreneurs from April 2009
    XV
     
    If we peel off society as an onion, we eventually arrive at the individual bodily human being as the ultimate perceptible form that makes decisions and performs actions. The greater the relationship, for example a Bank, the more individuals. And individuals differ, no one is alike in thinking, interests differ and personal attitude. Personal gain, self first, or the interests of the whole first. The bank, the sum of people, as part of a living society.
    Every body has a kind of circulatory system which is regulated by a heart function. Our natural environment, on which we depend entirely, can only exist because of the presence of water. It enters the atmosphere through evaporation and through a combination of all kinds of forces the evaporated water is combined, the clouds are scattered by the wind and eventually somewhere above land it falls again as rain or snow. Flows on, collects in streams and rivers, and ends up in the sea again. To evaporate again. The suction - evaporation - and letting go - precipitation - is a kind of heart effect. The moist soil provides the harvests.
    With the growth of society, the increase in economic activity, the need arose for flow speed and more and more money, which created the need for further strengthening of the heart function, the instruments to keep it flowing and to be able to control the quantity at will let it grow so as not to hinder the growth of the “Body Society”. That is the very essence of modern banking. Letting go of the gold standard was a necessity, because otherwise the money supply could not increase and also by manipulating the gold supply a group of a few individuals could have held the actual economic power in their hands. The unbridled flood of money, mainly in American Dollars, a kind of Deluge, has on the one hand caused what is now called “Crisis”, but more importantly, a significant increase in material prosperity worldwide. Unevenly distributed, I immediately admit, but also an increase in consciousness that now makes us realize that Society consists not only of the Western world, but also of Africa, Asia and so on. The next phase? The United Nations Dollar, prepare yourself. No more exchange rates and nationalistic financial importance.
    The banking system no longer has the function of safekeeping money and lending out against high profits, but the first task is now the Payments System. The Netherlands has always been a pioneer in this field. The SWIFT system, a money transfer system between companies in different countries, was to a large extent the work of ABN Bank. The SEPA system, which has enabled private individuals in the Eurozone to make mutual payments since 28 January 2008 without much effort and costs, has been largely designed by ABN Bank, together with foreign partners and the European Community. (Personally I understand the purchase of the ABN Bank, the available knowledge influences an essential part of the development of the Society. A bit similar to the predecessor of the ABN Bank, the Nederlandsche Handel-Maatschappij, founded by King Willem I, who played an important economic role after Napoleon's retreat.)
    What has happened recently in the banking sector is the saying goodbye to people who think too much in terms of personal interest structures, which has been given the opportunity by the dormant society. Where there is no guidance, a vacuum is created and that is not always filled by the forces with the best intentions aimed at the common good.
    Banking as we know it in the Netherlands, with its simple payment system, is unique in the world. The Netherlands had / has virtually no restrictions with regard to transfers abroad, at most a notification obligation for the Dutch Bank. This has caused many companies to settle here, because of the free payment system. The Netherlands as a transit country for money. (Much like the many refugees through the ages with their knowledge, and thinkers like Spinoza, Descartes, Voltaire, you name it. The free issue of books.)
    The reorganization that has now started will lead to the splitting off of the payment system from the well-known banking sector with its non-transparent functions. Independent legal companies that are not involved in any way in risky financing constructions. Actually something like that old boring Post and Municipal Giro. In addition, the savings bank, possibly combined with a checking account, where money can be deposited securely, with an image such as an ASN Bank and the Triodos, and finally the Commercial Bank. The latter active in the field of trading and issuance of shares, IPOs, all kinds of smart profitable products, in which you participate at your own expense and risk. The industry is being torn apart, decomposed into factors, and carefully reassembled with a view to protecting the individual client. But the greed of the executive staff was only possible because of the dormant society on the one hand and the collective greed on the other. Anyone who took themselves a little seriously and was aware of their social role, came out unscathed, even at a profit. How that new banking system will develop is the sum of the sum of U.S to trade.
    The banking system, the heart function within society, which draws in money and releases it again, a pump effect. And one such form of release is lending to the corporate sector, in addition to lending backed by mortgages and consumer credit to private individuals. Borrowing money has a disadvantage, it is not a form of income, but must be repaid, with interest. Which in turn benefits the lenders, ie the customers and possible shareholders of the bank in question. Maybe yourself, or your wife and / or children. The whole of society is an extremely artful piece of radar, where the smallest hitch can have major consequences. Not paying attention or acting selfishly by one or more individuals, or groups, and accepting this can have major consequences. If a Bank issues strange bonuses, close the account. Make a little effort.

  9. It's hard to understand. Many people get it wrong, which leads to:

    unwise economic theories;
    conspiracy theories, right down to outright hatred of banks and bankers;
    all kinds of gradations in between.

     
    That is unfortunate, because it is all based on misunderstandings and not on facts and insight.
     
    ———————————-
     
    I will soon try to read the site and go through the articles from article onwards. This is to see if the above claim is valid. Incidentally, I think the Economy menu 'Money creation and interest' is also the best in terms of organization of the site. I would recommend organizing the entire site into logical units like this.   

  10. >>> Moderation by Douwehttp://rudhar.com/index.htm

    I have deleted his comments for the following reasons.

    First of all, Ruud explains little or nothing substantively here, but only refers to his own blog where we have to refute his explanation in his blogs in the discussion here. That is already the upside-down world and in my opinion the wrong place. In addition, there is no specific reaction option per blog / topic on his blog there, which means that the discussion of his views moves here, which is actually standard off topic.

    This is now the third time this has happened, and the discussion is just a rerun of moves that took place earlier under the article The US Solves The Problem With Their Sovereign Debt.
    http://www.visionair.nl/ideeen/mensheid/de-vs-lost-het-probleem-met-haar-staatsschuld-op/

    The discussion will remain on that topic because this was the first time there. Ruud Harmsen and others can happily exchange their points of view in that topic, but I have no need to repeat that discussion again here.

    Finally, I find his way of responding and approaching others annoying for the atmosphere on the blog and his abundance of often short responses with only a link to his blog is very confusing for the general discussion structure.

    All in all, reason for me to stop this now.

    And to quote the driving judge, you will have to do with this. :-)

    1. Hi Douwe, I thought it was not that bad with the unpleasant atmosphere.
      Even though I didn't fully understand Ruud and have different points of view, I think it's going a bit too far to delete his comments. That whole discussion arose because of everyone who responds to this topic. You cannot expect to get everyone on the same page. I've seen less decent conversations before.

      That is my humble opinion.

      1. I agree with you that. Ruud has been a borderline with me for a long time and in terms of person he also seems like a nice man, but the discussion is because he often only refers to his own blog, spammy and offtopic like ..., which is why everyone can discuss his views further either on his own blog or on http://www.visionair.nl/ideeen/mensheid/de-vs-lost-het-probleem-met-haar-staatsschuld-op/ But I don't see the point in going over that discussion over here again.

        I understand that you may not have seen that discussion at the time, so read it about it and feel free to ask specific questions to Ruud. Ruud is also not banned or anything so he can also freely continue to respond in that article.

    2. Douwe,
      Deleting entire responses, and at the same time also removing them from the recycle bin, is indeed not the intention. However, spam elements can be removed in comments stating the reasons. Simply removing it is also in violation of the editorial rules on visionair.nl.

  11. Leon,
    my response was also erased by mistake, in which I wanted to tell you that I think you and Ruud both know a lot about money, and that economics is a very difficult matter, with arithmetic rows, exponents, formulas for simple and compound interest, the 72 rule, investment and inflation. It's pure math. So my respect for this. And that I hoped that the discussion can continue with that you will accept things from each other if properly substantiated, and that Ruud can explain his points well. It's about 'the death spiral of our economic system'.

    1. Thanks Julie,
      Ruud has pretty good points, but he makes a mistake in accounting, so things are really stated wrong by him.

      Okay I'll do my best! Good weekend in advance.   

    2. Julie, economics is not difficult, it is made difficult. Economy literally means housekeeping.

      As soon as you have an unlimited loan for a household, things go wrong. The abandonment of the gold standard in combination with fractional reserve banking and governments promising welfare states are the cause of all the misery.

      None of it is new, it has happened so many times. All paper currencies always end in hyperinflation, which is ingrained in the system.

      http://dollardaze.org/blog/?page_id=00017

      What Ruud does is give people false hope that things will be different this time by providing disinformation. This cannot be denied harshly enough.

        1. Well, now a calculation for you:

          A man has some extra money: € 2000 to be precise. He decides to invest this in a fixed-income government bond. He invests it for fifteen years at an annual compound interest rate of six percent. How much will he get back after those fifteen years?

        2. yes, how are you?
          a matter of just typing it seems to me. :-)
          isn't it about knowing how to calculate it?

        3. ? Julie what do you want with this? 2000 + 6% after year 1 
          2120 + 6% after year 2 etc etc

          I think in the current situation there is nothing left after 15 years due to hyperinflation 

        4. INTERMED / Compound Interest 

           

           
           

           
          Compound Interest Calculation

           
          Calculation overview

          Insurance agency Atlantis

           
           

           

          Hood.
          € 2.000,-

          Inl.
          € 0,-

          R.
          6,00 %

          Expensive
          15 years

          End capital

          € 4.792,-

          Jr.
          Capital
          Interest
          End cap.

          1
          € 2.000,-
          € 120,-
          € 2.120,-

          2
          € 2.120,-
          € 127,-
          € 2.247,-

          3
          € 2.247,-
          € 135,-
          € 2.382,-

          4
          € 2.382,-
          € 143,-
          € 2.525,-

          5
          € 2.525,-
          € 151,-
          € 2.676,-

          6
          € 2.676,-
          € 161,-
          € 2.837,-

          7
          € 2.837,-
          € 170,-
          € 3.007,-

          8
          € 3.007,-
          € 180,-
          € 3.187,-

          9
          € 3.187,-
          € 191,-
          € 3.378,-

          10
          € 3.378,-
          € 203,-
          € 3.581,-

          11
          € 3.581,-
          € 215,-
          € 3.796,-

          12
          € 3.796,-
          € 228,-
          € 4.023,-

          13
          € 4.023,-
          € 241,-
          € 4.265,-

          14
          € 4.265,-
          € 256,-
          € 4.521,-

          15
          € 4.521,-
          € 271,-
          € 4.792,-

          T.
           
          € 2.792,-
           

           
           

           

           
           

           

           
           

           

        5. Haha, yes, you can do it that way too, right?

          It is easier to use the formula E = K (1 + r) ^ n, where E is the final total capital, K is the capital (what you put in), r is the interest rate, expressed as a decimal number, and n is the number of years .
          Then we get:
          E = 2000 (1 + 0.06) ^ 15
          E = 2000 (1.06) ^ 15
          E = 2000 (2.396558193)
          E = 4793.11

        6. Julie, that formula was also used above,
          but I don't quite understand your question
          where do you want to go? 
           

        7. The man is Muslim and should not receive interest, Julie. That is why he has also decided to convert that € 2000, - into gold, it is the Kondratieff winter, isn't it?

          After 15 years it brings in a sloppy € 24,000 and a good night's sleep .. :)

        8. I have noticed that in a short time a pawn shop and a buying shop for gold and precious metals have been added, in the city where I often visit. That says something… ..

        9. Not must, but allowed. So no compound interest, final amount is the same 2000 euros as for which the bond was originally bought (by the first owner). That is always the case with bonds.

        10. No Ruud, her statement was with compound interest! and how that works in practice is irrelevant, so the final amount is 4793.

          I have reviewed your blog, but I still see the same accounting errors, when are you going to correct them?

           

        11. 1) Theorem? In the case of bonds, the (coupon!) Interest is paid out in the interim, not added to the principal. Fact.
           
          2) Name the concrete accounting errors (with quotation!). But not here. Email or comment at WordPress. Until now, all your criticism has turned out to be evidently incorrect or documented rebuttable. So now don't just bluff, deliver.

          Key point: admissions of guilt to yourself are nothing, so they are not on the balance sheet either.

        12. You can reinvest the interest that is paid monthly, quarterly or annually. Sometimes that can also be done automatically for you.

        13. B… Harmsen: buy the book: bookkeeping recorded,
          then you see it, good luck! 

          And yes here I no longer respond to your nonsense  

          Confessions to Yourself? ... 

  12. I have also taken this topic back to our political CU forum, in order to continue to feed the knowledge that we are now financially wrong, which we could have stopped for a long time.

    actually my topic there, which I have called 'breaking through the crisis spiral' is read quite well, I believe.
    what is it nice for a digital literate that a link to this is so simple to indicate.

    do you always spread this information in your environment?
    Too bad if we had to go all the way to the * ^ + # @ * first before we wake up and say goodbye to the GGs.

  13. One more assignment tonight:

    A man makes hockey sticks and croquet hammers. Both require a two-stage process: machining and finishing. The processing time of a hockey stick is 40 minutes and that of a croquet hammer is 20. The finishing time for a stick is fifteen minutes and for a hammer thirty. Forty hours per week are available for editing and thirty hours for finishing. The profit on a hockey stick is € 50.- and on a croquet hammer € 35, -. How many hockey sticks and croquet hammers does the man have to make each week for maximum profit?

        1. Have a nice weekend to you :) It is a resource I gave; make a graph (in a spreadsheet that you like to work with) so that you can solve this question. You argue that economics is really not difficult. So let's see.

        2. The problem with economics is not so much that economists don't know how to do sums, but that they don't know which sums to do when.

        3. And before you draw up equations, you have to determine whether your starting points for those equations are correct. For example, Ecoomen think that people are rational beings, while experienced investors know that their fellow investors are driven by fear and greed,

        4. No, not necessarily. Who knows, for example, the finishing time largely consists of a drying stage in which you can actually do something else. It could also be that the market for croquet hammers is much smaller than that for hockey sticks, so you overfeed the market.

          With smart production planning you can then produce much more than your calculation example shows.

        5. Well then you get an optimum, so many sticks and so many hammers, where the profit is maximized. idd graphs.
          The graphs are nice though.

          I did not say that economics is simple, maybe I was too quick to say in your example that only sticks are made.

           
           

        6. You said economics can be simple, okay, that's not the same :).
           
          First degree (linear) polynomials are often used in business for optimization issues. Quadratic (quadratic) polynomials are used, among other things, for gravitational problems. Higher degree polynomials are often used for complex systems such as economics.

    1. I solved it as follows. Producing hockey sticks ($ 50) is more profitable than producing croquet hammers, but producing two croquet hammers ($ 70) is more profitable than producing one hockey stick. Assuming you only produce hockey sticks, you can produce up to 60 sticks (€ 3000). This leaves 900 minutes of finishing time (the limiting condition for croquet hammer production). You can produce up to 30 croquet hammers during this time (which replace 15 sticks). I then arrive at a production of 45 sticks (€ 2250 profit) and 30 hammers (€ 1050), together € 3300. Ff see if it is correct.

      1. Germen, you are close to the math solution: The steps of linear programming to solve an optimization problem like this are
        1. Make equations for each aspect of the problem: The machining time represents two-thirds hours of operation on each hockey stick plus one-third hour of operation on each croquet mallet, which must be less than or equal to 40 hours in total.
        The finish time equation represents one fourth hour finish of each hockey stick plus one second hour finish of each croquet mallet, which must be less than or equal to 30 hours in total.
        The profit comparison is $ 50 for each hockey stick and $ 35 for each croquet mallet.
        2. Graph the work and finish equations in the standard form. (Multiplying any term by three removes the fractions, equation must hold.)
        3. Draw the equations with the 'concealment method'. When we draw the lines, we get an area of acceptable values for H and C. (on or below these two lines, above H axis and to the right of the C axis, this forms a four-sided shape within which all the acceptable values lie.) Pick the points within the quadrilateral that are correct for the edit and finish equations.
        4. The points of maximum and minimum profit can be found on the vertices of the quadrilateral, we use these points in the profit equation to see which gives the most profit.

        The highest value when entering the four values in the profit equation is 50 (40) + 35 (40) = € 3400. The man has to make 40 hockey sticks and 40 croquet hammers a week for maximum profit.

  14. Economics has sub-areas such as micro-economics, business economics, macro-economics, international economics and development economics. The calculation examples I gave are micro and business economics. The international economy has three main areas, see also Wikipedia. Discussions on this year's and next year's economic budgets have failed. There is a budget deficit of 9 billion, but the Netherlands does not want Ned at the moment. money to Brussels. (Minister Dijsselbloem)http://www.rtl.nl/components/actueel/rtlnieuws/2012/11_november/09/economie/dijsselbloem-geen-extra-geld-aan-EU.xml
    The tasks in the economy are to put the budget in order, reduce income disparities and allow the economy to pick up. Calculation and calculation are essential, in addition, no abuse should be made.

    1. Julie, you can also approach the economy from a system analysis. So how is money made, where and when is it made? Who have the rights to create money in the economy? What is a consequence of interest in your system, etc. 

      That is mainly what I have tried to do in my analysis and what you also see in the article above. How does it turn and flow and in which directions. And all this is not that difficult in the systems, although it can become infinitely complex in the details.

      By looking at it that way, however, you can quickly determine that there are a few mechanisms in the economy that are going to lead to a big bubble and thus a crash, but also that people's 80% pay more interest than they ever receive and so on. 10% earns a lot of money from this, 10% pays about as much as they receive.

      I would say if you want to know something about our economic system I would start with this approach and it is best to watch the film Money as Debt with Dutch subtitles as the starting film. On http://www.youtube.com/watch?v=ooyMha3831I you can find it.  

        1. It sure is. I just don't quite understand how all this has to do with the opening post. But as long as people have fun with each other in the comments, I'm fine :-)

        2. I don't agree with you, Julie, you're doing maths now. That has nothing to do with understanding of the system or the architecture of our current monetary system. 

          In fact, it only distracts and in that sense the understanding of the system gets in the way rather than helping. Just as Ruud gets lost in all kinds of terms, definitions and word games, people can also deal with these kinds of sums of three human lives without ever learning to understand the architecture of the system. And how simple that system is in essence, you can see in the first illustration in the article. 

          Again, do as many sums as you want and make them as difficult as you want, but if you want system understanding, don't get too involved with these things. 

          Instead of wasting your time on this, you better check out The Money Masters. 

          But I say that if you and others have fun with these kinds of sums, I think it's fine. Although it might be more useful to write your own article about it if you want to highlight this side for once.

           

        3. Douwe,

          I understand what Julie means, and I understand your explanation too.

          Sometimes it's easy to go back to sums and equations to get things straight.
          I understand what they indicate in films such as money as debt etc. but I still want to see it myself in “professional terms”, so I make that balance sheet / profit and loss account and accompanying journal entries.
          Seems like a bitch but still explains a lot.     

        4. Okay if it helps people then a thank you to Julie might be more appropriate :-) Apologies Julie and thanks for the calculation examples. 

        5. It is also important to be able to calculate well and to be 'above the computer' (beta), despite the fact that a lot of calculations are done by computers, for example at the trade fair. Furthermore, the data centers must be properly secured against failure and incorrect programming of a algorithm, because a 'flash crash' has major financial consequences (losses).

    2. Julie, actually with these examples you indicate that economics can be simple. Because there are algorithms (and in your example not too difficult to understand) that can ensure that the consequences of certain decisions can be calculated.
      What are our current economists and ministers doing, however: they throw the phenomenon of 'trust' into the battle to make people as insecure as possible. As if nothing is certain in the financial world. If something could be calculated with certainty, it would be the financial world, because it has been set up by man himself and is essentially very simple in nature. But yes, that certainty, the people who have an interest in uncertainty are not waiting for that (read: top layer / elite)

        1. Interesting piece indeed. I was a bit familiar with the concept of black box trading. Didn't know it was used on such a scale.
          It shows once again that the economy is being artificially complicated. The more I read such articles, the more I wonder what we are all doing. On the other hand, it shows the necessary fanaticism to come up with such a thing of course :-)

    1. To quote a quote from that second link:
      “Debts are the basis of a fiat, unsecured money system. If debts are not paid off, money is destroyed. "
       
      That is incorrect: when paying off a loan, money (in a monetary sense) is destroyed. Typo or fundamental misunderstanding.

      1. What is wrong with this comment? If debts are not paid off, the money will be destroyed, right? If a company goes bankrupt, the bank has probably just lost some of the money. If the collateral has too little value. Part of the money will then be destroyed. 

        1. No, it is not correct. The bank records: Loan at Loss due to bad debt. Neither money. For the (almost or completely) bankrupt customer, at most something changes in the debts (which are wholly or partially forgiven), but debts are not money. Money is receivables (credit side of the bank balance) and nothing changes in such a debt restructuring or bankruptcy.
           
          Ergo: The authors of the article have not mastered basic monetary concepts. That makes the whole piece invalid and unreliable.
           
          Next!
           
           

        2. @ Harmsen: Nonsense. During the Great Depression there were huge numbers of debt defaults. Result: a shrinkage in the money supply of 30%.

          Suppose a pension fund invests in government bonds of Greece, Portugal and Spain. At a certain point, these 3 countries decide to stop paying off this debt. In your reasoning, this would have no consequences for the pension fund. Completely nonsensical. A holder of debt loses all his money if the debtor goes into default, unless he gets something back by means of collateral or something.

        3. Theo, November 12, 2012, 5:22 PM
          ==
          @ Harmsen: Nonsense. During the Great Depression there were huge numbers of debt defaults. Result: a shrinkage in the money supply of 30%
          ==

          Classic fallacy: 'Cum hoc ergo propter hoc', a variant of 'post hoc ergo propter hoc'. Wikipedia has both been translated and explained.

          There was indeed a shortage of money during the crisis of 1929. But that does not prove that the direct cause was due to borrowers who were no longer able to meet their obligations.

          See http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression#Monetarist, quote:
          ===
          In their 1963 book A Monetary History of the United States, 1867-1960, Milton Friedman and Anna Schwartz laid out their case for a different explanation of the Great Depression. Essentially, the Great Depression, in their view, was caused by the fall of the money supply. Friedman and Schwartz write: "From the cyclical peak in August 1929 to a cyclical trough in March 1933, the stock of money fell by over a third." The result was what Friedman calls the “Great Contraction” - a period of falling income, prices, and employment caused by the choking effects of a restricted money supply. Friedman and Schwartz argue that people wanted to hold more money than the Federal Reserve was supplying. As a result people hoarded money by consuming less. This caused a contraction in employment and production since prices were not flexible enough to immediately fall. The Fed's failure was in not realizing what was happening and not taking corrective action.
          ===

          Theo, November 12, 2012, 5:22 PM
          ==
          At a certain point, these 3 countries decide to stop paying off this debt. In your reasoning, this would have no consequences for the pension fund. Completely nonsensical. A holder of debt loses all his money if the debtor goes into default, unless he gets something back by means of collateral or something.
          ==

          I have never argued that such a thing would not affect pension funds. On the contrary, that would be disastrous. That is precisely why other governments of eurozone countries have done and are doing their utmost to prevent this. That is why I think that is a good policy.

          Indeed, when having to write off a loan, a creditor loses money (in an everyday human sense). But that does not mean that there is also money destruction (of money in the monetary sense). These are two very different concepts of money. That is precisely why hardly anyone understands this matter. That's why it's so good that I'm explaining it. Article 16, I quote:

          ====
          Money creation and money destruction are concepts from monetary theory, part of the subject of economics. They are based on definitions of various types of money. Those definitions are used by central banks, non-central banks, economists and statisticians to measure the money supply. The definitions are as they are for good reasons.

          These definitions of money largely correspond to what people experience as money in everyday life. But not completely! There are substantial differences!
          ====

          Without a keen understanding of those two different concepts of money, you can never understand what money creation is, and the same is true of money destruction.

        4. I also tried to look at the website again with the articles by Ruud Harmsen and to be honest, it doesn't immediately make me much wiser. Take, for example, the first article in which it should become clear what money creation is. It is not immediately very clear. I had to read a few times to understand it better. Money as debt or money as claim: it remains a question of definition or interpretation. That article 19 explains quite well.

          I found the first article to be curious in its example to explain money creation. After the loan of 90 euros cash to villager B, M1 is 190 euros. As soon as resident B would deposit this money into a bank account at the same bank, there would be 100 euros in cash again and 81 euros in contact could be lent to villager C. M1 would then be 100 + 90 + 81 = 271 euros. There will then be 190 euros in cashless money and 81 euros in cash. There is then 19 euros in cash available to meet the minimum coverage of 10% that is required in this example. It is therefore an example of fractional banking that is elaborated here. This is further elaborated in Article 2. There is indeed a limit to money creation by primary banks.

          Incidentally, it was interesting to do this for myself to immediately see the relationship between the money creation in the form of credit / debt and the increase in the money supply M1. There is actually a 1 to 1 relationship in this simple example. Article 2 sums it up correctly M1 is then, if I am correct, 1000 euros. After all, there is 1000 euros in book-entry money on the bank's balance sheet in the current accounts. 100 euros as the original property of resident A and the rest 900 euros as paid-up credit borrowed from the same bank. M1 has then increased by 900 and the debt also by 900.

           
           
           
           
           
           
                 

        5. Ruud does not even understand something very important or he does not understand that it is so important, but there is a very big difference between a normal loan between two people and a loan between people through a bank and that is that a bank has the right to fractional banking . I took this piece out of the other discussion for a moment because this is the basis of the problems we are in now and Ruud apparently needs 19 blogs to clearly convey that essence. I am responding now because I do not want people to get confused by all the fussing of Ruud and the basic practice of money is very easy, probably also the last one in this post.

          ——

          You (addressed to Ruud then) now mix up the loan between people and the loan from a bank to a person… how hopeless this.

          I don't know if you are deliberately trying to confuse this or not, but I'll explain it again, but especially to the people reading along.

          If I have lent 100 Euro to an acquaintance, then I cannot pay at the supermarket with that claim on him. Just give it a try. The total amount of money that people can practically pay with does not increase with this loan from me to him. 

          This is fundamentally different from a bank lending money to a person on my positive balance. Or how I prefer to put it, than for a bank to create debt to a person on my positive balance. Then I still have my 100 Euro and that person has suddenly also received 90 Euro from the bank, and if he deposits it into a positive account again, 81 Euro can be created on it. The amount of money that people can practically pay with is increasing here. 

          It is not difficult, this is the difference between a loan between people and how a bank can lend money. 

          Again until you cannot explain the difference in your first blog, I personally do not take your knowledge on this subject seriously because you apparently do not understand it yourself.

          Anyway, we can continue for a long time with this yes no game. I think readers themselves now have enough information to draw their own conclusions. And otherwise everyone read this article again and especially look through all the sources yourself. Don't believe anything, but try to understand as much as you can. 

          http://www.visionair.nl/politiek-en-maatschappij/nederland/update-hoe-eerlijk-is-ons-huidige-economische-systeem-eigenlijk/ 

        6. I've read it better. The text below is pasted and addressed to Ruud's reaction at the time. I thought so. :-)  

        7. True, a large part of this in my view pointless discussion has already been conducted before. This piece was just as relevant in terms of content because I don't want people to think that the economy is more difficult than it is. The opening article painfully shows in 1 picture where the problem of our current system lies, so don't be fooled by all the terms and definitions used by Ruud. If someone needs 19 blogs to explain something basic like the difference between regular loans between individuals and bank loans, I think it indicates how seriously you should take their story. In addition, in the discussion with Ruud, I uncovered a number of errors in his blog that he has not corrected as far as I know, so I do not consider it useful to discuss further as long as he has not adjusted it. As long as Ruud just doesn't understand a simple film like Money as Debt, I think it's better for everyone not to take Ruud too seriously. At least not as seriously as Ruud takes himself. By the way, don't take my word for it either, but just think carefully for yourself. And personally I think it is better to spend your time in a blog of an Ad Broere adbroere.nl than in that of Ruud. But everyone is also allowed to make their own choices in this regard.

        8. So I also quit. So is the second time I give it a try. It doesn't make sense for me to follow. It just doesn't matter to me. To be honest, I don't think it's written accessible either.

        9. I just stop studying those articles by Ruud. I find it too difficult to follow frankly. I would like to give Ruud the following.
          I would personally start by explaining the difference between secured and unsecured money. Give the history of money. What it now says is an extensive analysis of the current fiat money system that is being explored in depth. But it builds up logically by starting what money actually is. We already start with M1 in the first article with a balance sheet. As a layman, these are concepts that are actually not interesting. In my view it is better to deal with this at a later date. Whether it is all M1, M2 or M3. It is and will remain unsecured money.
          Articles 2 and 3 attempt to provide insight into fractional banking. It is a nice theory in any case that no money can be added. If you delve into the details, this seems to be the case. In practice, however, this is different.
          That is why I first also went to article 16. To begin with: what is money in the blue area and money in a green area? It probably has to do with monetary money and everyday money. I also miss attention to topics such as the great depression and hyperinflation. After all, these are endings of unsecured money systems. You don't pay any attention to this in your articles. When trust is lost and how this can be done. It's nice to include M1 and M2, but it doesn't get to the gist.
          It is true that gold is also a mental association and can be viewed as a fiduciary. Only this trust always remains and not with a real fiat money system. Gold has thus historically proven more stable in value than a fiat money system recognized by the government. You cannot eat gold as stated in article 18, but you can always exchange it. The whole euro is also collapsing. If you have gold, you can always trade or hold value to convert it back into a monetary system. Just like people from Argentina did in 2001 by exchanging money in Dollars and then sitting in the new currency at the right time. 
          Commercial banks or primary banks may be bound by borders. Central banks, however, are not. They can continue to create money. In your articles, the role of central banks is not clearly highlighted. They determine the requirements that are placed on commercial primary banks. They have a major impact on the money supply. Central banks can cause hyperinflation. Something you now see happening in the US with the FED. They keep stimulating the US economy and the national debt keeps getting bigger. The current monetary policy of the central banks ensures that hyperinflation, the Japanese scenario or a Great Depression will come.

        10. Uncle T:
          ===
          I would personally start by explaining the difference between secured and unsecured money. Give the history of money.
          ===

          There is no unsecured money. By definition, each balance sheet contains the same amount of credit as debit. This is no different on the balance sheet of the central bank and of commercial banks. MB money is banknotes at commercial banks and reserve balances of commercial banks at the central bank. They are with the central bank credit. By definition, there are debit items for the same total amount. So everything is always covered. Through gold and further through various types of claims. See annual reports of central banks, which are public.

          Ditto at a commercial bank, but with deposits and (short / small) savings accounts that can be called up immediately, and M1 instead of MB. These banks are also required by law to have public annual reports, with balance sheets and profit and loss accounts. It can all be checked.

          ===
          We already start with M1 in the first article with a balance sheet. As a layman, these are concepts that are actually not interesting.
          ====

          Without basic knowledge of accounting and without understanding money aggregates, it is not possible to make judgments about money supply, money creation and monetary policy. Of course, not everyone has to be able to judge this. But whoever judges it needs that knowledge. Anyone who does not have that knowledge, and does not want to take it in, but does have an opinion about money creation and monetary management, is putting himself offside, he is doing the wrong thing.

          That is the same as demanding a driver's license, but dismiss concepts such as right of way and one-way traffic as “getting lost in concepts and definitions”.

          ===
          Articles 2 and 3 attempt to provide insight into fractional banking. It is a nice theory in any case that no money can be added.
          ===

          That is not my theory, I have not stated that. In practice, banks usually have a considerable excess reserve, so that in principle they can grant unimpeded credit. Provided that the capital requirement is also met and that they assess the risks of new loans as acceptable. This is often not the case, so that much less is borrowed than theoretically possible.

          ===
          If you delve into the details, this seems to be the case. In practice, however, this is different.
          ===

          Anyone can, if desired, follow the actual state of affairs from week to week via the public reports of, for example, the ECB.

          ===
          In my view it is better to deal with this at a later date. Whether it is all M1, M2 or M3. It is and will remain unsecured money.
          ===

          That is an incorrect statement that expresses a great deal of misunderstanding.

          ===
          I also miss attention to topics such as the great depression and hyperinflation.
          ===

          Indeed. Not my topic, or didn't come to it, but it is extensively in the English Wikipedia. http://en.wikipedia.org/wiki/Great_Depression, http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression . I have little to add.

          ===
          After all, these are endings of unsecured money systems.
          ===

          I do not think so. It is more that the natural fluctuations got out of hand in 1929, due to psychological effects (panic) and a bad Fed policy (tightening of the money supply, when easing was needed). In 2008 the Fed and ECB did better, which is why there is relatively little going on now.
          Ironically, critics now point to money creation as the culprit, whereas in 1929 it was precisely the lack of money creation (due to the Fed's failure to act) that allowed normal ripple to result in a global downturn.

          If the proponents of full reserve banking were right, a repeat of 1929 would likely result. Self-fulfilling prophecy.

          ===
          When trust is lost and how this can be done.
          ===

          Because almost all people are stupid and all talk to each other. Examples abound. How irresponsible is it, for example, to call for a bank run in a mild crisis such as we are now experiencing? Yet that happens here, among other things, almost daily.

          ===
          It's nice to include M1 and M2, but it doesn't get to the gist.
          ===

          Do not agree with. It IS the essence, along with balance sheets and accounting. Anyone who cannot handle these concepts can NEVER understand this matter.

          ===
          Commercial banks or primary banks may be bound by borders. Central banks, however, are not. They can continue to create money.
          ===

          In theory yes, but central banks are bound by their mandate, their main task: to keep prices stable. Usually a price increase of 2 percent per year is used as the target figure. Zero is not possible because you can never steer it precisely. And falling prices are not good, due to procrastination and other unpleasant effects. In principle, everyone can check for themselves whether the central banks are performing their task properly via the available extensive public reports.

          ===
          In your articles, the role of central banks is not clearly highlighted.
          ===

          That's right. When I started writing I didn't really understand their role. Much better now, thanks to Modern Money Mechanics, after a tip from Alexander I., from the supposedly courageous couple who are no longer paying their mortgage; so they draw completely different conclusions from the same document than I do. Unfortunately.

          ===
          […] Central banks […] They determine the requirements that are placed on commercial primary banks. They have a major impact on the money supply.
          ===

          Yes. They ultimately determine this, because they can adjust what the other banks do. Monitoring the money supply (enough but not too much) is the main task of central banks, in addition to keeping prices stable (and the two are closely related).

          ===
          Central banks can cause hyperinflation. Something you now see happening in the US with the FED.
          ===

          They can, but they don't. Which reports show that the Fed is doing this? Not known to me. Show me.

          ===
          They keep stimulating the US economy and the national debt keeps getting bigger.
          ===

          But does the money supply automatically increase? I wouldn't know that, I would have to study that first.

          That governments borrow too much, I think, is because they are too cowardly to tell the population that they have to pay more tax. And the population is too stupid to accept that message. Look at what is happening in Dutch politics this week. You would rather borrow more from the Chinese and oil sheiks than simply pay yourself.
          The central banks are not about that. Politics and central banks are separate and they should be.

          ===
          The current monetary policy of the central banks ensures that hyperinflation, the Japanese scenario or a Great Depression will come.
          ===

          In the case of the ECB, this is definitely not the case (based on the figures I have seen). I don't know about the Fed, I didn't look closely. But it would surprise me. If they are, then they are not doing their job properly.

          American governments (conservatives worse than Democrats) are completely insane and irresponsible and keep on lending and cutting taxes and waging wars everywhere. That cannot keep going well. But that has nothing to do with money creation and central banks, but with the disadvantages of democracy and a lack of courage on the part of politicians. Very different matter.

        11. The moment a villager starts paying off the debt, there will also be less book-entry money in the account and M1 will decrease. The debt then also pays off. Money is then destroyed when the credit is repaid. Now suppose that villager B is going to buy from villager C 100 kg of apples for 100 euros. Exactly the 100 euros that has been borrowed. This is transferred by bank transfer. The total cashless amount then remains the same. B then has a balance of 0 and C of 200 euros. B is very unlucky and the apples go bad. B is his money and is no longer able to pay back to the bank. The bank decides to cancel this money, but that is not possible. I don't think I can get it out that way with the cancellation of the debt and the decrease in the money supply.     

        12. It is possible, the bank then charges debit costs of uncollectible loans (ie the straw pot built up from previous profit, which is in credit, is reduced). The counter-entry is of course credit, so that the loan amount (which is debit) is reduced or canceled.
           
          All of those entries do not affect immediate or reasonably quick due and payable claims of the public on the bank (which are in credit), so it does not change the money supply. The bank, but less profit, in other words: the bank is getting poorer. But because of their interest income and thus obstructed straw pot, and their scale, they can suffer that, as long as not ALL loans turn out to be uncollectible. 
           

      2. Harmsen clearly does not understand the financial system: money IS debt. Money is created from debt. Ergo, if debt is not paid off, money is destroyed. 

        Tip for Harmsen: google Money as Debt. Very enlightening. 

        1. You twist my words. Everything I claim and assert is consistent with the global balance sheets of central banks, and thus with the insights of the accountants who have audited them. You're the one who is different from the rest of the world, not me.
           

        2. I did, see my detailed explanation at WordPress. After that you had no more reply. Because you were wrong. 
           
          Indeed, banknotes are also debited on the balance sheets of central banks in the eurozone. But that has to do with the agreed, theoretical distribution of the banknotes among all those different banks, and how that works out in practice. There are small differences between them, and they are recognized in debit or credit, depending on the situation.
           
          This detracts from the principle that banknotes are debited on balance sheets everywhere, EXCEPT central banks (which issue them themselves). There are banknotes in credit if they are NOT there, and not at all on the balance sheet if they are there. That is also very logical: a banknote is a claim against the central bank: “pays the sum of the bearer”. Used to be really on the pounds and guilder notes, see Wikipedia and WordPress.
           

        3. Leon, the tone you use belongs in primary school.
          I don't understand that you, as adults, still react to each other. This is like some kind of sadomasochistic entertainment.

        4. Okay, because I get an idea for a 'ignore X' button, which I can set for you, so that it becomes impossible that you can still react to each other.

        5. Yes, because on a visionary site essential matters are not allowed to be discussed, is it?
           
          Much more effective is: ban Leon, Dave and Douwe (yes, the moderator moderated!), Because those are the ones who ignore every argument and keep repeating the moves.
           

        6. I don't like it when someone persists in obvious nonsense, and then claims that IK doesn't get it, while 100% is certainly the other way around, as has now become apparent dozens of times.
           
          You would still expect independent persons to check it out and / or inquire with people who have studied this profession. But no. 
           
          Instead, the check is much simpler:
           
          “Is Ruud on the right side? No. Is Leon on the right side, does he belong to the good kluppie? Yes!
           
          Aha, SO Leon is right. We no longer need to look at the subject itself, that is just nonsense, the matter is clear. ”
           
          Is that a way to gain insight and knowledge? Not to mention VISION.

        7. It is probably a psychological mechanism on both sides that makes the discussion pointless. Bad sign that you are getting carried away like that ...

        8. How would you react if someone kept insisting that Fou Yong Hai is dirty and the sauce stinks, while the whole city feasts on it because it is prepared just fine?

        9. Harmsen can you write those journal entries here on visionary,
          instead of always referring to that website of yours.

          1 You are saying nonsense on that website
          2 you don't understand accounting
           

        10. "You don't understand accounting"
           
          1) what's wrong in my http://rudhar.com/economi/boekhoud/prcactnl.htm
          2) if not wrong, what do I say about accounting, anywhere on the internet, what contradicts it.
           
          3) Where do I say anything, anywhere on the Internet, which contradicts the series of textbooks you mentioned earlier tonight. Please demonstrate with quotations, with acknowledgment of the source, opposed to each other.
           

        11. Theo:
          “Harmsen clearly doesn't understand the financial system: money IS debt. Money is created from debt. "
           
          When making money, a debt always arises (but on one side of the bank). So money does indeed arise from debt, as debt. But money IS not to blame. Money is a claim. Article 19.
           

        12. so the bank owes a country?
          the central bank makes money, and is then indebted to the state?
          I don't know who has it all here? 

        13. If the country has money, the bank is indebted to the country.
          If the land has borrowed money, the bank has a claim on the land.
           
          Usually both is the case. Result: giving balance (term learned from professor Franz Hörmann). Balance extension means money creation, because only the credit side of a bank balance is money in the monetary sense, and the debit side is not. Articles 10 and 16.

        14. "The central bank makes money, and is then indebted to the state?"
           
          Hell yes. To the state or to any company or person in possession of that banknote. As I already quoted under my WordPress blog: 
          ===
          As a historic Überbleibsel ohne practical Bedeutung sind solche Zusicherungen heute nor auf den Banknoot zahlreicher Länder zu lesen. Ein Beispiel aus England: Bank of England: I promise to pay the bearer on demand the sum of 5 Pounds (here in Sterlingsilber gemeint)
          ===
          Source http://de.wikipedia.org/wiki/Banknote
           
          You keep thinking I made all this up, but I am not. I am only summarizing what is contained in numerous reliable sources. I spent weeks digging into Wikipedia (especially the English and German), and THEN I started writing.
           
           

      1. But that's not about bonds.

        What interest-on-interest is (also called compound interest, or, recently learned, anatocism) has been known to me for over 40 years.

        Within an hour of the first question, Jan commented:

        http://www.visionair.nl/politiek-en-maatschappij/nederland/de-doodspiraal-van-ons-economische-systeem/comment-page-1/#comment-55539

        the correct solution in case there would be compound interest (so with something other than a bond): 1.06 to the power of 15 times 2000.

        I am amazed that afterwards a lengthy discussion arose about it, even though the answer had already been given (and a little later - by me - the correct bond answer: 2000).

        1.  

           
          But what does it say then:

           
          Photo: PHOTO: JOEP VAN DER PAL


          Who is capable of being income putting something away every month in a savings account or in a risk-averse investment, such as a safe government bond, should certainly do so. Due to the so-called interest-on-interest effect, a capital can rise exponentially. Albert Einstein is said to have once called this effect the eighth wonder of the world. The longer you save, the steeper the capital's climb.
          Interest on interest is also known as compound interest. This means that the saver also receives interest on the interest payments from previous years. As a result, the interest component rises faster and faster, so that the capital can eventually increase exponentially.
          Most savings accounts automatically pay compound interest. However, if you invest the money, for example in government bonds, you have to reinvest the return yourself to get an interest-on-interest effect: you buy additional government bonds. There are bond funds that do this automatically, they don't pay out any of the returns, but add that to the portfolio.

           

  15. Ruud makes the journal entries at the central bank here on the site of visionary then:

    The creation of banknotes, the issue of those banknotes to companies / individuals (via commercial banks), the return of those banknotes to the central bank, and the interest addition to the central bank (because interest-bearing) 

    And also make those journal entries for the companies that have borrowed banknotes to make expenses through commercial banks.

    If you do all of this you will see that you are wrong. 

    1. Leon asked me:
      ===
      Ruud makes the journal entries at the central bank here on the site of visionary then:

      The creation of banknotes,
      ===

      No journal entries yet, because banknotes that the central bank has not yet put into circulation have no value yet. They may book the production costs (paper, ink and depreciation on the complicated security machines) as costs, but hopefully those costs will be relatively small. Then for example:

      Banknote production costs 2000
      to Current account paper vendor 20
      to Current account ink supplier 20
      to Depreciation of money-making machines 1980

      If they don't have those machines themselves:
      Banknote production costs 2000
      to Current account Johan Enschede 2000

      ===
      the issue of those banknotes to companies / individuals (via commercial banks),
      ===

      Suppose the Dutch Bank sends a truck with 1 million in banknotes to Rabobank:

      Journal entry at DNB:
      Loan to Rabobank 1000,000 D
      1000,000 C of Banknotes in circulation

      Journal post at Rabobank:
      Banknotes in cash 1000,000
      to Loan from DNB 1000,000

      Rabobank is lending EUR 100,000 to Albert Hein:
      Journal post at Rabobank:
      Credit AH 100,000
      to current account AH 100,000

      Albert Hein also wants the amount in cash:
      Journal post at Rabobank:
      Current account AH 100,000
      of Banknotes in cash 100,000

      ===
      the return of those banknotes to the central bank,
      ===
      The above bookings, but just the other way around.

      ===
      and the interest addition to the central bank (because interest-bearing)
      ===

      Journal post at Rabobank:
      Interest charges on loans from DNB 20,000
      to Current account with DNB 20,000

      ===
      And also make those journal entries for the companies that have borrowed banknotes to make expenses through commercial banks.
      ===

      See above and various examples in my articles and in Modern Money Mechanics.

      1. Look: Ruud has finally figured it out:

        Journal entry at DNB:
        Loan to Rabobank 1000,000 D
        1000,000 C of Banknotes in circulation
        Journal post at Rabobank:
        Banknotes in cash 1000,000
        to Loan from DNB 1000,000

        Created banknotes, out of the blue, as he himself points out above.
        Rabobank is indebted to DNB, and further on lending to companies idemdito.
        So money is a debt and not a claim, so clearly, as long as you write it out once.
         

        1. "Created banknotes, out of the blue, as he himself points out above."
           
          I have never denied money creation, even in 2007.
           
          “Rabobank is indebted to DNB, and further on lending to companies idemdito.
           So money is a debt and not a claim, so clearly, as long as you write it out once. ”

          No, money IS not a debt, money is a claim. Debt also arises when money is created. This is logical, because every claim is a debt for the other party.
           
          Again the definition of M1: coins and banknotes in the hands of the public, and on demand public claims against banks. ALL economists around the world use that definition (which is also very logical and consistent). Only with the visionary blog visionair.nl they say they do not accept this view, but without opposing it. But the closely related concept of money creation is used and supposedly understood.
           
          Can not. Inconsistent and illogical.

        2. No Ruud, you once wrote about what is written on a coin: “owned by the central bank”, this says enough.

          You don't see it, don't want to understand.

          Read that explanation from the central bank again, and look through your own journal entries above.

          I will stop with you and Tui, make sure that I can no longer respond to Harmsen, he turns 400 years of bookkeeping upside down, that's what, Harmsen invents new bookkeeping.  

           

  16. Uncle T:
    “I don't think I'm going to get out that way with this debt cancellation and reduction of the money supply. "
     
    See my 2:57 pm comment. No money destruction when writing off an irrecoverable loan, so.

  17. Leon, November 12, 2012 at 6:10 PM 
     
    That's all already in Modern Money Mechanics. Have you already read and understood that document thoroughly?
     
    They usually talk about adding reserves, but if you replace that with “send a money truck with banknotes”, from central bank to commercial bank, then you have the situation you mean.
     
    The creation of money by a commercial bank, with journal entries, is stated http://rudhar.com/economi/monydebt/nl/010slfnd.htm .

  18. “Tip for Harmsen: google Money as Debt. Very enlightening. "
     
    I've known Money as Debt since 2007 and it was exactly that video that made me decide to write my series, although it didn't actually start until July 2012. You should have known if you had read me, it is mentioned in several places.

    1. Hi Ruud,

      I just wanted to ask you a few questions regarding the quote below of your statements here in this topic:

      You say that when a creditor must write off a loan (so must write off a claim, because you said in another topic that the creditor has a claim at the time that he lends money)
      no money is destroyed.
      But you also claim (I heard you say in another topic) that money creation is inevitable when a claim is created.
      So I cannot reconcile this.

      Or do you mean that money is only created when it concerns a bank? So when a bank lends money and with that a claim arises that there is money creation and when that is done by an institution other than a bank, that that is not the case?

      If that's what you mean then that seems like a very strange way of defining money creation. But maybe you mean it differently, so I'm curious about your explanation on this.

      QUOTE:
      Indeed, when having to write off a loan, a creditor loses money (in an everyday human sense). But that does not mean that there is also money destruction (of money in the monetary sense). These are two very different concepts of money. That is precisely why hardly anyone understands this matter. That's why it's so good that I'm explaining it. Article 16, I quote:
      ====
      Money creation and money destruction are concepts from monetary theory, part of the subject of economics. They are based on definitions of various types of money. Those definitions are used by central banks, non-central banks, economists and statisticians to measure the money supply. The definitions are as they are for good reasons.
      END OF QUOTE

  19. Actually it can be very simple I think.
    If you set up a kind of fair share system with a kind of bank that is not based on making a profit and a lot of people who endorse sustainability take their money from the bank and put it in the sustainable bank with the aim of financing a house, food and energy (the basic needs) and products that do not have a built-in wear and tear process so really last a long time and are simple to maintain by people themselves for everyone in the world, then you could create a fair distribution of prosperity and well-being.
    Perhaps more importantly, you are actually withdrawing capital from the current system and thus undermining the normal economy and financial structure.
    In that way you become a significant power factor if you were to do that with really many people who want to change, and I think that can happen on a large scale via the internet quite quickly.
    That way you can start with an alternative system to the old system which is based on debt.
    If the established banks get into trouble because of the money transfer (that seems likely to me) and the ordinary economy threatens to go bankrupt, the government will probably want to do something about it.
    At that moment you can force change as a very large mass and they will have to listen because then the power will lie with the masses and you can then make it clear that you as residents of the world no longer accept it and I think that in the end if the critical mass is large enough that the balance will turn in the right direction.

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