Purchasing power and financial gurus.

Something is wrong

One day, a man who used to think much went to Fabian. "This interest charge is wrong," he said. "For every $ 100 you borrow, is asking $ 105 in return. The $ 5 extra can not be paid ever since it does not exist. Many farmers produce food, many manufacturers produce goods, and so do everyone else, but only you produce money.

Purchasing power "Suppose there are only two entrepreneurs around the country, and we use the rest of the population. We borrow $ 100 each, paid $ 90 in wages and expenses and we are left with $ 10 profit (our wage). That means that the total purchasing power, of all people, is $ 90 + $ 10 multiplied by two, this is $ 200. But to pay you, we should sell our entire production for $ 210. If one of us succeeds and sells all produced $ 105, the other man can expect to earn $ 95. (if the total purchasing power is $ 205, and one of the entrepreneurs sell $ 105, there are only 95 U.S. dollars in the hands of people to buy at another employer). Also, part of goods can not be sold, since there would be more money in the hands of consumers to buy them.

Selling for $ 95, the second contractor still would owe you $ 10 and can only borrow asking for more pay. This system is impossible. "

The man continued, "Surely you should issue $ 105, this is 100 for me and 5 to spend. Thus have $ 105 in circulation, and the debt can be paid."

Financial Guru

Fabian listened quietly and finally said, "The Financial Economics is a very deep, man, it takes years of study. Let me worry myself about these issues, and you worry for their own. You must become more efficient, increase its production lower your expenses and become a better entrepreneur. I am always willing to help in these matters. "

The Man was not convinced. There was something wrong with Fabian's operations and he felt that his question had been answered evasively.

However, most people respected Fabian's word - "He is the expert, the other must be wrong. Look at how developed the country, how our production has increased - better let him handle these issues."


source: economia.com.mx