Where is the source of wealth?

In the last article (read here), you know that debt is the backbone of the current economy. We cannot live without debt. On the other hand, do you notice where is the source of the wealth? Who is creating the biggest wealth? Please refer to the last article (https://evainvestmentjourney.wordpress.com/2020/11/06/debt-is-money-our-current-monetary-system-is-debt-based/) for the illustration below.

It is Bank X. Bank X did not come up with the initial deposit. It had no cash at all initially. It is A who contributed the cash. Through lending money to B and D, Bank X received interest income out from nothing.

A and C are savers. They received some deposit interest from Bank X because they contributed their cash. However, for sure, what A and C received will be lesser than Bank X.

B and D are the borrowers. Are they the losers in this scenario because they need to pay off loans? B borrowed money to buy a car. There is no income generated from the loan. Hence, he needed to work harder to earn more money to pay off the loan.

D borrowed money to do business. The more loans he got, theoretically, he would be able to buy more products to sell. Hence, his profits will increase. Through this example, I hope you understand that the one who is borrowing can be in the better position than the savers if the loan is used to purchase the right thing.

I will write more about this in the coming weeks. Stay tune!

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