{"id":754,"date":"2008-10-03T14:08:46","date_gmt":"2008-10-03T19:08:46","guid":{"rendered":"http:\/\/ietransfer.wpengine.com\/?p=754"},"modified":"2017-05-02T13:57:00","modified_gmt":"2017-05-02T20:57:00","slug":"money-and-debt-new-economic-architecture-required","status":"publish","type":"post","link":"https:\/\/inspiredeconomist.com\/articles\/money-and-debt-new-economic-architecture-required\/","title":{"rendered":"Money and Debt : New Financial Architecture Required"},"content":{"rendered":"

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Whenever you take out a loan the temptation is to imagine a big mountain of money in a secure vault somewhere.<\/h3>\n

Your friendly bank manager, a nice affable chap, is on hand doling out credit to any soul who can jump through his hoops.<\/h3>\n

This is miles, no decades<\/em>, away from the truth. Here\u2019s how debt works today ….<\/h3>\n

In order to lend money, banks have to borrow it from another bank. Usually, that bank has also borrowed it from another bank … and so the borrowing continues.<\/p>\n

As collateral for these loans many banks put up their assets. Many of these assets are themselves funded by loans.<\/p>\n

Some are even bundles of loans, grouped together to allow the income generated through the loans\u2019 repayments to be considered an asset.<\/p>\n

So what you end up with if you seek debt advice in the UK<\/a> in the end is a pile of debts, each secured against another. As the pile rises the whole structure becomes shakier and shakier, making the architecture of the whole system riskier and riskier. Not what a good economist wants to hear.<\/p>\n

America In Debt<\/h3>\n

In case you don\u2019t believe me, here are some figures for the USA in 2007:<\/p>\n