[kryogen1c]

>You sill would need $105k at the end of the year to satisfy all debts and have an equilibrium withing the economy. Where is the extra $5K coming from? Magic??

this makes very little sense. You are not lending the entire economy and then demanding more than the economy be paid back. You only lend a portion of the money supply so that a slightly larger portion is repaid.

Even if that were the case, isnt that what QE does?

[jaxtellerSoA]

>You are not lending the entire economy and then demanding more than the economy be paid back.

You are right that you are not lending the entire economy, I was just making the example as simple as possible. But, the second interest is being charged then the demand of money back exceeds the actual money supply. What companies and investors do to increase revue for 1 particular organization has no effect on the money supply. All companies are doing are vying to try and redistribute the money that already exists in their favor, they aren't creating money (if they are that is called counterfeiting and is illegal).

> Even if that were the case, isn't that what QE does?

Yes, QE increases the money supply. I am not saying that the money supply doesn't get increased (by the Federal Reserve), merely pointing out the fact that once you get on this treadmill it just goes faster and faster and faster, and there is no way to get off without a disaster (bubble).

[zaroth]

Jax, I’m sorry but this is just fundamentally incorrect. The economy is not a zero sum game. Clearly there is annual economic growth, and that growth compounded over many years has lead to orders of magnitude growth in the size of the US/World economy.

Companies borrow money in order to invest in their own growth. Borrowing allows increased growth rate and in turn increased spending which has follow-on effects downstream (this is called the money multiple).

I very much enjoyed taking the intro Micro and Macroeconomics classes as part of my Econ degree. There are probably even great courses online for free now. I’d highly recommend it.

[kryogen1c]

> But, the second interest is being charged then the demand of money back exceeds the actual money supply.

Not true, and I'm having a hard time finding your argument. You think if I loan you 1$ at 0% that's fine, but 1$ at 1% now exceeds the world's money supply? Even debt > total money supply is payable as long as interest payments are < payments being made.

> once you get on this treadmill it just goes faster and faster and faster, and there is no way to get off without a disaster (bubble).

Not strictly true. I have taken on debt with interest and paid that debt. Why is a disaster needed?

[Droobfest]

When a company pays back interest to a bank, the interest isn't magically removed from the money supply. So the bank also has $10k more profits, with which it pays its employees more, who can then buy more widgets from the company etc.

Yes, whether this is sustainable does depend on increased economic activity. Which is why it's so important to lend for (sustainable) productivity growth or you get a bubble which creates liquidity problems when it pops.