The Mechanics of Money Lending

Acquisition of Economic Goods

In the very simple model presented here I have demonstrated the mechanics of the money lending process and how the acquisition of other economic goods other than money has fundamental importance in that process.

Repayment without Money Expansion

Sale of Economic Goods for Money

In addition, I have demonstrated how the repayment of a money loan requires the sale of economic goods for money. That sale allows for the repayment of money loans with interest without the expansion of the supply of money.

 

(To see additional models showing the effects of 100% reserve banking and non-payment of the loan see the appendix.)