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Thread: Economics. Is it difficult or is it just me?

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    Economics. Is it difficult or is it just me?

    I don’t get modern economics. First is how money is created. Yes it is linked to inflation aka hidden interest and is also linked just plain interest and then there is the bank cost and TAX that also needs to be taken into consideration.

    So per bank transaction you pay an amount and nothing that happens in a bank is ever free. Someone is forever paying someone else. Now almost every working individual uses a bank, that just in banking cost millions are generated. This goes to pay stuff but I am sure that someone is making money here.

    Next is the loan system let us say you buy a house in the end you pay double for your house! Again money was translated into profit. Now it comes to the credit system and it tells you it is okay to spend money that you don’t have as long as you can pay it back with interest. Again this interest is generating profit! But here is the thing... All interest is basically projected profit and then comes the loans and bank cost. How can any bank lose money?

    The only way I can see them lose money is with bad investments. Think about it. Investments are not projected profit. It is risk projected profit. Now risk projected profit can double or triple the banks money supply. But was it necessary to invest knowing that the banks are already stable with their interest and bank cost earnings?

    I always say don’t gamble if you can’t afford it. These banks feed the blue-chips stock and will see a steady but slow growth. But then there are these strange investments that the bank made to urn risk projected profit?

    This is why bank-cost goes up this is why they are unstable right now because a lot of that risk projected profit failed to urn money. My question is banks can urn good money by just doing what banks do. And that is to use interest and bank cost to generate cash. Yes the profit is not as high as it can be but you are not facing closure every time the economy goes down.

    But I am sure that I am missing something? Or am I?

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    Site Caretaker Dave A's Avatar
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    I suppose it depends on whether you see a loan as being the same as an investment?
    The trouble with opportunity is it normally comes dressed up as work.

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    A loan in any form is an investment the bank makes in the individual because the individual must repay this loan with interest. Thus the money and profit will be returned to the bank within the time specified by the loan contract. The truth is loans are profitable in the bank’s point of view. The risk involved is also very low because the individual must specify collateral. Thus the bank will still benefit from the liquidation of the specified collateral. Then when the collateral is liquidated and the funds are still outstanding those funds will be evaluated and a new payment amount will be set. Thus you the individual must then pay back the outstanding amount. It is also worth pointing out that the outstanding amount is also connected to the interest system thus again this venture will be profitable to the bank. I stand to be corrected.

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