Comments by "John Burns" (@johnburns4017) on "How we destroy money by Richard Murphy, Professor of Economics" video.
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1) I take a £30,000 loan for a car over three years.
2) The bank creates the money out of thin air.
3) Money put into my account.
4) Car dealer is paid - he takes his cut and pays the wages of his staff, property taxes, other taxes and car manufacturer. That money is circulated into the economy.
5) The car manufacturer pays his staff, taxes and suppliers. That money is circulated into the economy.
6) I pay back the loan to the bank each month, with interest.
7) The bank pays its staff and taxes with that money. The money circulates into the economy.
8) When I fully repay the £30,000 loan after three years, the bank destroys the money, as they never had the money in the first place as it was created from thin air. If they do not destroy the money, they are printing money for themselves, so it has to be destroyed.
9) So I work and the money (£30,000) which I got up front from a bank goes directly into the economy, doing good. I pay for this money circulating into the economy, over three years.
But what an earner for the banks. They create £30,000 out of thin air, do get to keep the £30,000, then charge interest on £30,000. £30,000 they never had in the first place. Money for nothing.
So, HMG, via banks, creates the money for a loan out of thin air. I pay the loan back, then this money created out of thin air is destroyed. It is only in existence during the loan period. If there is no debt there is little money floating around.
If HMG wants to create money out of thin air, maybe it will be better for society to use it for a Universal Basic Income (UBI). Then maybe fewer loans, with less use of banks.
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