Some contend that there is only enough money to pay the principal on the outstanding loans, and not the interest. That is because when a loan is created, they create the principal but not the interest. So where does the interest come from? Either money that was already in circulation (previously backed by gold), but once this money is gone then the wealth we once had has been taken by the bankers.
Griffin contends
"However, I practically fell out of my chair when the program repeated that old, silly argument about the Fed not creating enough money to cover the cost of interest on debt; and, therefore, the world must forever be in debt. I knew right there that the writer did not read The Creature from Jekyll Island or, if he did, he forgot my analysis of this common myth. For those who are interested in that topic, it is fund on pages 191-192 of The Creature."
Maybe somebody who has the book can elaborate?
Who Creates the Money to Pay the Interest? (Creature from Jekyll Island by Ed Griffin page 191-192)
One of the most perplexing questions associated with this process is, " Where does the money come from to pay the interest?" If you borrow $10,000 from a bank at 9%, you owe $10,900. But the bank only manufactures $10,000 for the loan. It would seem, therefore, that there is no way that you-- and all others with similar loans-- can possibly pay off your indebtedness. The amount of money put into circulation just isn't enough to cover the total debt, included interest. This has lead some to the conclusion that is is necessary for you to
borrow the $900 for the interest, and that, in turn, leads to still more interest. The assumption is that, the more we borrow, the more we
have to borrow, and that debt based fiat money is a never ending spiral leading inexorably to more and more debt.
This is a partial truth. It is true that there is not enough money created to include the interest, but it is a fallacy that the only way to pay it back is to borrow still more. The assumption fails to take into account the exchange value of
labor. Let us assume that you pay back your $10,000 loan at the rate of approximately $900 per month and about $80 of that represents interest. You realize you are hard pressed to make your payments so you decide to take on a part-time job. The bank, on the other hand, is now making an $80 profit each month on your loan. Since this amount is classified as "interest", it is not extinguished as is the larger portion which is a return of the loan itself.
The decision then is made to have the bank's floors waxed once a week. You respond to the ad in the paper and are hired at $80 per month to do the job. The result is that you
earn the money to pay the interest on your loan, and -- this is the point--- the money you receive
is the same money which you previously had paid (to the bank). As long as you perform labor for the bank each month, the same dollars go into the bank as interest, then out the revolving door as your wages, and then back into the bank as loan repayments.
It is not necessary that you work directly for the bank. No matter where you earn the money, its
origin was a bank and its ultimate
destination is a bank. The loop through which it travels can be large or small, but the fact remains
all interest is paid eventually by human effort. And the significance of that fact is even more startling than the assumption that not enough money is created to pay back the interest.
It is that the total of this human effort ultimately is for the benefit of those who create fiat money. It is a form of modern day serfdom in which the great mass of society works as indentured servants to a ruling class of financial nobility.
Go check that out, cus I ain't typing out 3 pages... try find the pdf if it exists?
