It’s time to reduce interest rates again…I think. Just what is this interest rate all about anyway? Interest charged, is a charge for using someone else’s money. I have a million bucks, and I want to get some return on my money, so I loan it to someone. For the use of it, that someone pays me interest for the use of my money. If the borrower is not too reputable, or there is a strong possibility that I may never get my money back, I will either charge a higher rate of interest, as a sort of insurance policy, or demand that the loan be “secured.” “Secured,” means simply that I want the title to his car, or a lien on his house to be certain that the borrower will pay me, or suffer dire losses, which I can translate into full repayment of the loan. There are some people I wouldn’t loan a dime to, and there are others that I would gladly loan money, if I had any extra, at no interest at all. So, what’s the big deal?
Here’s the big deal. If I loan someone money, no government should tell me how much interest to charge. That’s for starters, but only the beginning. The most important thing I suppose, is that when someone borrows money, the person loaning it should have it to loan! A fine gentleman, whom I have known for many years, came to me last week (true story) and needed to borrow some money. I have known Larry for many years. He was a miner in Silverton, and I never saw him drinking in the bars. His three kids turned out well, and he, as most miners, has gotten ’rocked up,’ meaning he has silicosis, or his lungs are full of crap he got while mining underground. I truthfully didn’t have any money to loan him. All I have is gold and silver, and no debts. I hate dollars, and rarely have any around, much less as surplus. I worried about Larry for many days, and still worry, but I simply cannot help him. I wish I could. This is a private matter, and has nothing to do with the actual life out there in the world of finance.
When a person borrows money from a bank or mortgage company perhaps, that bank or mortgage company usually creates that money out of thin air. Every time a loan is taken out, the money supply is increased by that much. Not from Don to Larry, but from a bank to Larry, or Fanny Mae or Freddie Mac to company C, who bought the loan from company B, who bought the loan from bank A maybe. All created out of thin air, just like the government paper which other nations buy as an investment. When you have dollars, and place them in a bank who loans out dollars, the chances are that your dollars have not been loaned. Fiat dollars have been loaned. Believe it or not, when a bank loans money, it is an ’asset’ on their books, because you owe them. When you deposit money in a bank, it is a ’liability’ on their books, because they owe you. So the more they loan, the better their books look…after a fashion anyway. Loans then can be ’performing,’ meaning that payments are being made, or ’non-performing,’ meaning that payments are not being made. When banks or mortgage companies loan paper, un-backed money, they get security in the form of a mortgage on a home, car title, or something pledged of value, in addition to a signed promise to repay, which is the ’note.’
It can get awfully complicated, as we now see around the world. In order to sell more homes, create more debts, (assets on their books), all sorts of hanky panky was resorted to, in order to make loans. Lots of homes were built, and in order to sell them, and the builders borrowed money created out of thin air to build them, supposedly to immediately sell them, and pay off the loans. Real estate agents glommed onto the new homes to sell them at a commission, and appraisers over-appraised the homes so that they could be sold to the unwary at exalted prices, and with little or no money as a down-payment. The process made home prices go up, up, up. Everyone thought the bubble would last forever, as most think about all bubbles. Banks around the world, looked at America and all the supposed prosperity, and bought the mortgages, so they could get a return on their clients’ invested funds. (Of late, courts have made foreclosure very difficult for those last in line, who bought mortgages).
Like all such things, the bottom had to fall out, and the mistakes had to come home to roost. Home buyers found themselves with payments they couldn’t meet, home builders found themselves with construction loans they couldn’t repay, because people weren’t buying their homes, and real estate sales people were not making any money because of a lack of sales. But this was only the beginning. We’re at that point now. The home building material manufacturers and sales outfits found themselves in trouble also. No lumber was being bought, and no nails, roofing, plumbing, and electrical stuff either. No windows, doors, bath tubs, carpets, and light fixtures were moving off shelves. The sellers and makers of those things laid off their employees, simply because they had to or go broke. There was a lot of unemployment, bad debts, foreclosures, and bankruptcies. Bad times, in other words. We are coming to that point, unless I am grossly mistaken. Government issues false statistics to try to calm things down and make it all appear O.K.
So what does this have to do with interest? Just this. If money hadn’t been created out of nothing, millions of homes wouldn’t have been built, and millions of bankruptcies wouldn’t have happened. If money hadn’t been created out of nothing, would we be better off without all those now empty new homes? If all that money hadn’t been created out of nothing, would foreign nations and banks by the hundreds have been fooled into buying into the fake dreams created by fake money? Why should interest be dictated by a government? Because it is government that creates the valueless money out of thin air, so everyone has to pay the piper. If government didn’t create money out of thin air, what would America be like now?
First of all, there would be no welfare of any kind, and I mean welfare to bail out the shiftless, ignorant, or unfortunate. There would be tens of millions fewer trash people around to commit crimes and be a nuisance. There would be a lot fewer housing developments, and the cities would still be whole and unpolluted. If there were no money created out of thin air, there would be no inflation, and prices would remain the same year after year, People could save in their dollars, and be secure in doing it. Banks would loan deposited money, and wouldn’t create money to loan out of thin air. There would be no Federal Reserve, and probably 90% of the federal government would disappear. Congress couldn’t hand out money and benefits created out of thin air, and all the bureaucrats would be out of a job, and D.C. might be a sort of ghost town for a while. At least until the government buildings could be sold to companies who made a profit, and who could afford to buy those monstrosities.
Controlling interest rates on paper money created out of thin air, is merely the tip of the corrupt, fake, fairy tale, government financial system, which might well bring us all down eventually. The entire thing is a mirage. The values, amounts, interest, and statistics are all just pipe dreams. There is no real money which controlling interest rates can affect. The money, whose interest rates are issued by a fake bank which has no assets, (Federal Reserve), is fiction also. It is all a huge game of Monopoly, except when you play Monopoly, there are no interest rates to control, and the players know it is a game. Unfortunately, the world is running on fiat money, printed just like Parker Brothers prints Monopoly money. The world in its entirety is running on fake, un-backed money which is run off the presses night and day, and which scrip is given value by the issuing governments who force citizens to use it by means of ’legal tender’ laws. It’s all a gigantic hoax, and that’s why I am in business. I shouldn’t be, but I am, and now so is my son, because so many out there have discovered the raw truth about simple economics. Value cannot be created by a printing press. Value is a tangible thing, created with capital, hard work, intelligence, intellect, and diligence.
Was this column rambling? Uh Uh, but when I sit at the keyboard, I never know where it will lead. Lowering interest will make it harder to sell our fake debt, but a bit easier for the bankers to save face a little bit. We’ve got to keep the show moving along, or the truth may out, and we can’t have that! We literally cannot have the truth to come out…until lots more have protected themselves anyway. If you have been confused, my son’s phone number is first on the web site, and mine is second. Call him about purchases made with him, and me about purchases made through me. Sorry, this isn’t my best effort at writing!