Time Value of Money

You've heard it said often, "the time value of money". The concept is that money in hand now is more valuable than the same amount in the future. True enough. If you need money now and borrow it from someone, that means they put off the enjoyment of their money so you can use it now. You have to pay for that privilege and that's called "interest" or rent on the money you borrowed. Central banks, however, have a special trick which lets them charge interests on money they lend you but they don't put off any enjoyment of money when they charge you interest. But they collect interest anyway. What they do is create a note receivable as an asset and the offsetting liability is checking accounts payable. See? No asset was used to create the loan. A new liability was created which, as a part of the banking system, just floats more currency into the economy. The person spending it gets the full value of the money but when the new money is finished being absorbed by the market, prices in general have risen. That's called inflation and it's a secret tax. That's why governments like central banking. It lets them tax the poor, unsuspecting masses without them getting upset. If you think about the example, the cost of the money was zero. Yet, interest is paid until the loan is discharged. You know. You see it in your mortgage amortization. What is the interest rate you pay when the cost to the lender is zero? That's right! Infinity!! Amazing. It goes on all the time. The bankers get an infinite return but we get rising prices. Not only that, no one is postponing enjoyment of any money. Time to stop this madness.