Comment: That's a good explanation

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That's a good explanation

of how things are now. That discount rate (the time value that you described) is only of value to people who have sacrificed something (the use of money they planned to use otherwise) by lending out. If they had kept it in their cookie jar instead, they wouldn't have seen any difference unless the loan defaults.

I agree that if you're planning on using that money, you did suffer some loss but not otherwise. An in a world where we had eliminated the fractional reserve system, the total wealth of the now banks, insurance companies and stock institutions would be essentially distributed on a weighted scale to the general populace.

Regarding your iPhone being worth more today and next year, that is really only true in a limited scenario. IPhones are a new and emerging technology. Bicycles, on the other hand, are not. My bike has been worth the same for many years, with only a small premium while it was in the store a decade ago. In fact, with inflation in the mix, it has probably gained in value as many other assets have. So, if we extrapolate that back to your iPhone, I would contend that delaying your phone purchase for a year (assuming you were only making one, non-upgrading purchase) would yield a much better phone than if bought a year earlier.

Don't get me wrong. I'm not advocating that we ban interest in today's environment. That's not possible and would be a recipe for disaster. However, I am saying that by giving people the real purchasing power that results from their labors (10x current rates at least), that the acts of borrowing at interest and selling off large portions of your company publicly would slowly go away. After all, if you personally had 7 figures in the bank and your spouse wanted to start a bread store (which you supported), would you lend it free or invest for a return?

Last topic. downsizing doesn't have to mean depression. That's hype talk given us by the perpetual growth Keynesyans. If a business is paying a high wage (due to the factors above) and its employees retire earlier, is that a good or bad thing? What if they worked 20 years instead of 40? That would actually mean that 2 workers' careers would be supported in the normal 40 year career of today. It would also mean that all those, what I call 'fluff jobs', would eventually go away. As a position can be automated or becomes otherwise unnecessary, attrition would leave them open. This is what happens when it becomes an employee's market, not an employer's. So how does THAT happen? It happens on it's own when the wage market is such that people can easily cover that 'emergency' or long term expense by just working a few more months.