If Greece's currency colaspes

From 1790 to 1910 the population of the United States grew from under 4 million to over 90 million. Also during this time the geographic area of the country expanded to over 20 times its original size. The land mass was so vast in relation to population during the 1st 100 years the government was giving it away. Of course the first 130 years was a time of this country’s greatest economic expansion – how could it not be?

 

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http://online.wsj.com/article/SB10001424052702304314404576409410834139324.html#articleTabs=article

This is a good read...

 

Prohibiting interest would mark the end if the free enterprise system, and would probably cause only very short term loans to be made so enough fees could be charged to offset the loss in interest. It also doesn't seem to address the problem of massive, growing, unpayable quantities of debt.

 

Nations such as Brazil and Argentina had as much going for them as the US in terms of population and resources, yet never quite reached the same level due to faulty economic and political systems. Of course, they might catch up now that the US has lost its revolutionary vision and has gone the way of Europe.

 

Could you elaborate on why this would end the free market system? A fee as designated by the lender accomplishes the same goal as interest except that it's predictable and doesn't balloon over time. If you fail to pay back the amount agreed upon in the time agreed upon (likely incremental), then they can still send the collectors after you. This would eliminate all the extra debt that gets piled on by compounding interest, and keep it to the original debt that both parties considered fair for the transaction to take place. This isn't much different than interest really, except that it's fair.

The other piece about forcing loans to come from existing wealth (eliminating fractional reserve banking) would also go a long way in eliminating debt, because the buying power of existing dollars would be much stronger, and therefore you would retain a lot more of your money that would otherwise be spent on inflated goods and services.

 

The free market system relies on the ability of lenders and borrowers to contract with each other in any manner they wish. If you force a lender to accept a fee instead of interest, the negotiated solution is no longer voluntary. It is imposed. The market has its own way of dealing with unpredictability, and it is unlikely that a government imposed substitute will work as well.

 

J.P. Morgan - I hate bankers and J.P. Morgan is the one I hate the most.

 

Thanks Cloud. I can agree with you on this point, but only if they were loaning out their own money. It seems ironic that there is need for interest to combat risk on loans when there is actually no risk involved since it was free money in the first place.

 

Why JPM?

 

To answer your question, it might have never been if the government was controlling the economy as it does now. Incentives to take the risk on that made that expansion possible would have been removed as government interference in the free market, the Federal Reserve disingeniously refers to this as "intervention" would have made it impossible.

There is a simple test to the validity of the Federal Reserve system. That would be to resume a gold based currency that ran alongside the FRN and let the people choose which one to conduct their commerce in. There is no need to eliminate the Fed by law. However if this were to happen, I would bet my gold on which would prevail. If the Federal Reserve can't exist without these kinds of artificial protections, then it has no legitimacy.