People tell you to get out of debt and save money.
Money is created out of debt. When you get a loan, it is brand new money, created form absolutely nothing. If you get it all in cash, then those notes are paper debt obligations, in which you must pay back. But, after only a few seconds, if you handed it back over the counter again, you'd owe a little more, wouldn't you? So where does that extra money come from? Someone else's paper debt obligation certificate.
So, when you have a lot of debt and then you're out of debt and saving money, what you are actually doing, is now hoarding other peoples' paper debt obligation certificates. This is why if new loans aren't continuously made, the entire system doesn't work.
If everyone tried to pay off their loans, there would be no money at all, yet there would be a lot more money owed than even exists!
This is a pyramid scheme. They are illegal. But not for the banks.
The colonies used Colonial Scrip. It was interest free money. http://en.wikipedia.org/wiki/
Other Money
Here are some examples of non-debt money
House
Wine
Gold
Silver
Collectibles
You may be wondering why the money supply is expanding so much. It is because then, the debt is easier to pay in real terms, since the debt doesn't inflate. Your taxes might even go down. But one thing is for certain, and that's that savings will erode. Prices will go up. There will be no such thing as "Saving for something". Why save? You can't beat inflation really. If saved for something like a car for a few years, then that car's price is now 10% higher a few years into the future. So, you're better off getting a loan, and paying interest to the banks immediately, than saving for a car.
This is the system we live in. There is actually not a lot of sense to teach saving (sorry) since you can't out-save inflation. It's a pay as you go approach.
If we were on a gold standard, then of course you'd have to save, because borrowing 20 or so ounces of gold isn't easy. If you don't pay the bank back, they'll shut their doors, and people will be covered by the FDIC insurance if they had their electronic debt obligations there, but even the FDIC doesn't save. Banks pay into it, but the government doesn't actually keep that money. They just create new money to bail people out if banks fail. They borrow from the Fed, and pay interest and inflation the money supply even more, and cause inflation.
This is the best movie I have found that explains it all: http://tinyurl.com/yjkxdel
Good Trading,
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