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Newmoney Hub, Luxembourg, 1pg.
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Reviewer comment:
This is Mr. Kampa's view about credit -debt- and interest rates to be paid on
debt. He is correct but does not describe in sufficient detail why that is.
What he is describing in his example is a productive loan taken out by a
producer - this generates a debt of the producer and a credit for the loaner.
The production enabled by the loan is used to pay it off and the volume of
credit in the money supply is eliminated. But the government is NOT a producer
- it is exchanging credit for production which will be consumed while the debt
created by the credit remains on the accounts of the commercial banks. That
debt-credit remains in the outstanding money supply. Now if and when the
central bank 'purchases' that government debt it can withdraw creditmoney out
of the system.
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His critical point lies in the comparison between loans and debt - that
is credit - between two private entities - and the debt created by credit
issued by sovereign governments. The interest rate being paid by the debtor to
the creditor in the former case is canceled (disappears without further
payment) when the debt is repaid. The latter is not really a loan - the
government is exchanging the credit-promise for real things and the credit
becomes a part of the money supply. It does not need to be 'repaid' to anyone.
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