Repossessions to rise when interest rates go up

[Blagsta]

I'm not posting shite. Not at all. You are misrepresenting what I'm saying, which is a shite thing to do, I'll grant you. As far as I'm concerned, you talk a lot of half-understood long-winded crap when it comes to economics, ld.

tbf, I think love detective knows his stuff.

 

[littlebabyjesus]

.

 

[deke t lefel]

looks like pensions may be the new endownments

the bottom line is that inflation has overtaken growth and the present can no longer borrow from the future

 

[littlebabyjesus]

The present can never borrow from the future!


And inflation hasn't overtaken growth. We've been through a recession that saw the economy contract to about 94% its previous value, and it's currently back up to about 96% that previous value, and stalling there.

 

[kabbes]

Inflation has been highly misleading for a good 4 or 5 years now, in my opinion. The main problem is oil -- the fact that its price has been so volatile and the fact that it is priced in dollars, which makes the volatility even worse. But there are half a dozen other macroeconomic pressures that exist outside the local economy that are driving it too.

At some point, these pressures will (possibly temporarily) reverse and we'll have heavy deflation for a few months. Then it will swing back again. It's rather out of our hands at the mo.

 

[deke t lefel]

The present can never borrow from the future!


And inflation hasn't overtaken growth. We've been through a recession that saw the economy contract to about 94% its previous value, and it's currently back up to about 96% that previous value, and stalling there.

derivatives create deals in the future to provide "value" in the present - some take a profit in the present from future deals

if inflation is running at 4 to 5% and growth is running at 0 to 1% hasn't inflation overtaken growth?

 

[littlebabyjesus]

derivatives create deals in the future to provide "value" in the present - some take a profit in the present from future deals

if inflation is running at 4 to 5% and growth is running at 0 to 1% hasn't inflation overtaken growth?

Growth is calculated as the value of the 'real' economy - in other words, inflation is taken into account.

Derivatives are indeed a promise to pay a certain amount for goods that don't exist yet. That isn't 'borrowing from the future', though - it's just a transaction in which money is transferred from one person or entity to another. I'm no expert on derivatives, but they are effectively a 'zero-sum' game taken as a totality - they don't in themselves create wealth, as you seem to acknowledge by putting 'value' in inverted commas. But we can never borrow from something that hasn't yet happened - these are just money tricks, nothing more.

 

[Wolveryeti]

Nah - GDP growth is measured in constant prices (i.e. it is adjusted for inflation)

 

[Anudder Oik]

In Spain the massive 15M movement that has swept the country is mobilizing people to physically block evictions. It's now a daily occurence and they are having a lot of success. There can be anything from 50 to 300 pickets each time, so baillifs have to back off.

This video shows people stopping their 19th eviction on this estate. The man with the megaphone announces that another eviction in Malaga has been stopped at the same time....



This video shows people stopping the eviction of an 83 year old woman



There are loads of videos from all over Spain showing successful protests stopping evictions





If you type the word Desahucio (eviction) in youtube you can see more...

 

[A Dashing Blade]

. . .
Derivatives are indeed a promise to pay a certain amount for goods that don't exist yet.

Wrong.

Derivatives are financial instruments whose price derives from another financial instrument. (cf any derivatives 101 book but I'd recommend anything anything by Hull, available for free via google books iirc)

Since you've use the term "promise to pay" rather than (for example) "right but not the obligation" you seem to be thinking about futures (a type of derivative certainly) but no idea where you're coming from with the "for goods that don't exist yet" bit.

 

[littlebabyjesus]

Wrong.

Derivatives are financial instruments whose price derives from another financial instrument. (cf any derivatives 101 book but I'd recommend anything anything by Hull, available for free via google books iirc)

Since you've use the term "promise to pay" rather than (for example) "right but not the obligation" you seem to be thinking about futures (a type of derivative certainly) but no idea where you're coming from with the "for goods that don't exist yet" bit.

Ok. I should have said futures as that is what was being talked about. My point stands. You can't borrow from the future.

But what are futures if not promises or options to pay for goods that don't yet exist? Next year's coffee crop does not yet exist.


This is an important point, I think, because it is at the heart of the lie that says that the recent financial crisis is something that 'our children will have to pay for', as if we had used up resources from the future. This lie is trotted out by politicians yet it is a complete nonsense, mistaking money for that which it symbolises.

 

[Fruitloop]

You can borrow from the future. If I borrow money off you and dispose of it somehow, then in the future I will have to sell something of mine (property or labour) to pay you back.

 

[littlebabyjesus]

People within the system can reach agreements with each other that say, in effect, I consume resources today and you consume them tomorrow, but the system as a whole cannot borrow from the future.

As an example of what I mean, the so-called pensions crisis is a crisis of the distribution of wealth, not a crisis of 'borrowing too much from the future'. Pensions are not really paid for out of pensions contributions - pensions contributions are simply the securing of a promise that you will get a particular share of future consumption in return for consuming less today. But it is your consumption of less today that really pays for people's pensions. The important thing to do is to keep people working and producing real things and real value. The money tricks you perform to distribute these real things need to be effective in order to keep the whole thing moving, but they do not in any real sense ever involve any kind of borrowing from the future, which is simply an impossible thing to do.

 

[love detective]

Firstly, I say that it is anachronistic for the government (including its organs such as the Bank of England) to lend money at a lower interest rate than it borrows. This is a fairly simple point - if you need to borrow, why do you lend at a lower rate? A bank will borrow from the Bank of England at a certain rate and lend to others at a higher rate - the difference between the two rates being its profit margin. Now, regardless of whether or not it is the same people buying gilts as it is borrowing at the BofE base rate, what they are doing when they lend at the base rate is putting money into the private-sector system and what they are doing when they issue gilts is taking it back out again.

It is as if the BofE were begging banks to make profit-making loans - to be banks - and were prepared to pay banks to do it if necessary. To me, this is an anachronistic situation

There's a lot of conflation and misunderstanding in this post, so not really sure where to start (my response has pretty much turned into an essay, so have split it up a bit to hopefully make it more bearable/readable)

Introduction
There seems to be a fundamental misunderstanding by yourself as to the mechanics and functioning of both central banks and commercial banks and also the relationship between the two. In addition there's also a misunderstanding as to the relationship between the activities of the central bank in managing the money supply and the activities of the treasury in borrowing to fund the functioning of the state. I'll try and unpick the various strands, but the murkiness of the conflation (and indeed the topic itself) makes any explanation/response to your post a bit long winded, a headfuck to explain, and likely to veer away from the original point of contention in order to illuminate the backdrop to it. However as marx once said there is no royal road to science, and only those who do not dread the fatiguing climb of its steep paths have a chance of gaining its luminous summits.

Relationship between commercial banks & central banks - generic overview
Firstly, the element of 'borrowing' (the reason for the inverted commas will become apparent further on) from central banks by commercial banks is a tiny fraction of both the overall funding of commercial banks and the assets that they are used to fund. This is a basic axiom of money supply in capitalist society, i.e. a small amount of central bank money (effectively one of the narrowest measure of money - issued notes and reserve balance between banks and central banks) forms the base of the system then, via fractional reserve lending and the general circulation of money/loans/money like instruments, that small base of money is grossed up massively and the resultant grossed up money and money like equivalents all then forms wider the means of circulation (and payment) within society. Now there's nothing magic or conspiratorial about this process, it's just a function of the fact that money circulates.

Your post above seems to imply that you think commerial banks 'borrow' from the central bank and then lend on to other parties and that is a fundamental basis of their activities. In reality (and somewhat counter intuitvely) instead of a commercial bank having a net liability to the central bank (i.e. represting what it has 'borrowed') it almost always has a net asset with the central bank. Central bank 'lending' to commercial banks is done on a 'lender of last resort' basis - and as well as forming a tiny part of a commercial bank's funding, it is also always done on a really short term and sporadic basis, i.e overnight funding etc. and most of the time banks don't like to use it as it has a certain stigma attached to it (a sign of weakness in the bank's ability to borrow on the open markets etc..).

Granted in times of crisis and seizing up of the domestic & international money markets, central bank funding in the UK is relied upon more, and banks would crumble without it, however this is a temporary phenomena with the end of 2008 seeing the biggest spike in this, which has since disipated. This means that, your assertion that the central bank 'lends' to commercial banks at the base rate and then the commercial banks lend that money on to other parties at higher rates doesn't really hold true.

Relationship between commericial banks & central banks - specific example
It may be easier to demonstrate my point by looking at an example of an individual commericial bank and it's interactions/transactions with the central bank.

We can use RBS for this purpose. Now although it's effectively govt owned it's financial accounts are prepared on the basis of RBS being a distinct separate group, so we can use these to look at the borrowing & lending between RBS and the Central bank, and also place that in context of the overall assets & liabilities of the individual bank (i.e. RBS). So first of all, if we look at page 270 of RBS's accounts which shows its balance sheet - and look at the asset section - we can see at the end of 2010 it had total assets of £1,453bn. The bulk of these assets consist, as you'd expect, of loans, debt/equity securties and derivatives. Now this 1.45 trillion of assets needs to be funded by something, and looking at the liabilities section of the balance sheet on the same page, we see that this funding is mainly made up of deposits by banks & customers, debt & equity securities issued, and derivatives.

The question now is how much of the banks 1.45 trillion of assets is 'funded' in the way you suggest it is, i.e. by borrowing from central bank. Well if we then go to page 384, there is a table which shows what element of these 1.45 trillion of assets & liabilities relate to assets & liabilities with the UK state. The first column of this table shows assets/liabilities with central govt, which includes the central bank. Looking at this we can see at the end of 2010 there is 147 million of 'borrowing' from the central bank (we can ignore the rest of the liabilities in this column as these do not relate to transactions with the central bank). So out of RBS's 1.45 trillion of liabilites that funds its 1.45 trillion of assets only 147million is 'funded' by the central bank - this represents about 0.01% of its total assets/liabilities.

But this is only part of the story. If you look at the assets section of that same table, we see that RBS also has 18.8bn of balances with the central bank, i.e. money which the central bank owes to RBS. So on a net basis, instead of having a net borrowing from the central bank (as your assertion states it should), it actually has a net lending to the central bank of around 18.7bn. The reason why this balance is the reverse of what you thought it should be (and the reverse of what it intuitevly should be), is partly due to the way the central bank controls the money supply through it's open market operations and partly because commercial banks always hold a certain level of money with the central bank for stability purposes (on which they only receive a tiny rate of interest). The only exception to this picture was at the end of 2008 at the depths of the crisis, if you look at the same numbers on the table on page 384 for 2008, you see the inverse of what I've descibed above, i.e a net borrowing from the central bank of around 26.1bn - this was during the depth of the crisis when money markets were completely shut and the lender of last resort principle kicked in. As you can see however from 2009 onwards this was not the case. So why is that then?

Why do commercial banks have an overall asset with, rather than a liability to, central banks
The reason as to why commercial banks end up having an asset with, rather than a liability to, the central bank - is down to the mechanics of the way the bank manages the money supply and money creation (something that I've noted you seemed to have a poor understanding off previosuly). This process is called open market operations - and again perhaps somewhat counter intuitevely, the mechanics of the process is exactly the same as quantative easing, the only difference is the reason for doing it - i.e. it's done on a much smaller basis and it's purpose is to manage short term interest rates via the supply of base money in the economy.

So if the central bank decides it wants to inject more money into the economy - there are two steps that happens, firstly it creates money by a touch of a key stroke (the modern equivalent of the printing press) - it then uses that created money to purchase or repo from the commerical banks securities or other financial instruments. This is how the money enters the economy, i.e. not through the central bank lending to commerical banks, but by the central bank purchasing (or repoing) assets from commericial banks with money that it's created. The net impact on the central bank's balance sheet is an asset representing the security it has purchased and a liability representing the amount it 'owes' to the commercial bank for that purchase. This liability of the central bank represents, from the commercial banks point of view, an asset, money on account/deposit with the central bank (i.e. the equivalent of the 18.7bn we saw on page 384 of RBS's accounts) , which can then be used as money to do other things with (lend, invest etc..). To the extent that it just sits on deposit with the central bank however it earns next to no interest (and following QE in the last year or so, a lot of the money that was introduced into the economy endep up straight back on deposit with the central bank, due to fears about lending into the wider money system etc..)

Continued in next post

 

[love detective]

Continued from previous post

The economic upshot for this from the central bank's point of view is that it pays the base rate (or less) on the amount it owes to the commerical bank (say 0.5%) but receives an income of around, say 4-5% on the securities that it purchased from the commercial bank. i.e. it makes a stonking profit, not a loss as you suggest. This can be validated by looking at the records profits that central banks have made in the last year or so, mainly due to QE (UK and US for example ) - because remember the mechanics & outcomes of quantiative easing and the money supply activities of the central bank are exactly the same

Summary of the point of all this
Now this may seem like a bit of a digression and I'm struggling to retain the thread also, but part of your original assertion is that the state lends at a lower rate (to commercial banks) than it borrows through gilts (and correctly stated that the lending part is done by the central bank and the borrowing part by the treasury). In our example, and related explanation however (which is a representative example of a typical bank) we see that the central bank itself does not have a net lending position to the commercial bank, but instead a net borrowing position from it (and the asset that it actually has is not a loan to the commercial bank at a low interest rate, but the holding of a security that pays far more than the bank base rate). It does sound counter intuitive I admit, as you would expect that the central bank would be lending money to commerical banks and making a loss on it, but they are actually borrowing from commerical banks and (indirectly through the security purchase) making a profit on it. So your assertion falls down on that part, and that's before we even look at the other side i.e. the borrowings by the treasury and the interaction (or lack of) between that and the central bank money supply activities.

Conclusion
I could go on for ever about other aspects of this, but diminishing returns have probably already set in

One observation I'd make about yourself though is that I think a lot of your problem when it come to things like this, is that you seem to rely far too much on what I see as an almost metaphysical/cartesian logical deduction process for arriving at your conclusions. The problem is however that although your reasoning and logic is generally reasonably sound, often your starting premise is faulty, which results in the incorrect conclusions/results. I find this a bit curious as on the logical positivism thread, you seemed to be putting forward the case that this kind of blind reasoning doesn't tell us anything meaningful and an empirical/proof type approach is the only way to find things out about the world. However your words on that thread in relation to method/approach seems to contradict your actions when it comes to things like this. You don't seem to validate your original premises, nor try to validate the conclusions that your fairly well deduced reasoning have produced. I do get the impression this is because you are a little bit too much in awe of your own intellect and as long as your reasoning/logic appears sound to yourself, you don't see the need to empirically validate either your starting premises or the conclusions that you produce (i.e. you have reasoned it, so it must be right). All the things that are under discussion here (in terms of the points of contention) can be validated empirically to a satisfactory level, so there's no excuse for not doing so as part of your musings on the topic.

Finally, I have no more or less insight into this stuf than you (and as someone who left school at 16 and had no formal taught education since, if I can do all this, I'd expect someone what has benefited from a far deeper, richer and comprehensice education experience to do so as well) - I just spend a bit more time looking at the real world and validating reasoning against actual outcomes and adjust things in accordance with that. But the point of all this is not just to understand it as an end in itself, it's to be able to radically critique it from a position of complete understanding of it - and to show it up for what it is, but done so from a position of proper understanding. All too often on the left critiques are made about stuff without actually taking the time to get into the guts of the topic and only once its understood can you properly attack it.

 

[ferrelhadley]

http://www.bbc.co.uk/news/business-13971159

14% of jobs to go at Lloyds

HMV sees 14% loss in sales
http://www.bbc.co.uk/news/business-13971154

 

[love detective]

Derivatives are indeed a promise to pay a certain amount for goods that don't exist yet

As already noted, this is a poor description - the bulk of derivative contracts (or even just the bulk of future contracts) have nothing to do with goods, they can derive their price from the price of the underlying, but even for futures barely any of these actually result in an end exchange of money for goods, they are cash settled without physical delivery of the underlying 'thing', whatever that thing may be (and indeed most contracts don't even have a physical underlying thing, weather derivatives, credit events, interest rates, etc..)

That isn't 'borrowing from the future', though - it's just a transaction in which money is transferred from one person or entity to another - they don't in themselves create wealth

Your correct on this, but the description doesn't just apply to derivatives, it applies to any transaction in the sphere of circulation , i.e. lending & borrowing as well - none of this creates value, it just shifts it around - the fact that money borrowed may be put into use in a way that then actually produces (or does not produce) value is a separate thing altogether.

I'm no expert on derivatives, but they are effectively a 'zero-sum' game taken as a totality

Your right from the very narrow perspective of derivatives in and off themselves - i.e. for every person/entity who gains money from them, there's another person/entity who loses money from them - yet again this is the same with standard lending/borrowing of money and money equivalents - i.e. it all cancels out when you put the two sides of the transaction together (both principal and interest). However the zero sum game perspective becomes only a theoretical abstraction, when the wider impacts of the gains & losses made on these things are taken into account - i.e. if one side goes tits up because they end up having to make a big payout on a contract, they can't then settle other debts, which causes a chain of unwinding and losses/defaults etc.. throughout the whole integrated system

 

[littlebabyjesus]

Your right from the very narrow perspective of derivatives in and off themselves - i.e. for every person/entity who gains money from them, there's another person/entity who loses money from them - yet again this is the same with standard lending/borrowing of money and money equivalents - i.e. it all cancels out when you put the two sides of the transaction together (both principal and interest). However the zero sum game perspective becomes only a theoretical abstraction, when the wider impacts of the gains & losses made on these things are taken into account - i.e. if one side goes tits up because they end up having to make a big payout on a contract, they can't then settle other debts, which causes a chain of unwinding and losses/defaults etc.. throughout the whole integrated system

I'm reading your posts with interest, ld. I won't comment on them for now, except this bit.

Doesn't this come back to a point I made on another thread about interest? Isn't it true that, strictly speaking, no loan made at interest is ever repayable - someone somewhere will need to take out another loan to pay the interest.

The rest, yes, I agree with it. That it is effectively 'zero-sum' doesn't mean it can't have disastrous consequences. I was merely commenting on what I see as a misunderstanding when people talk about 'borrowing from the future', as if this represented a real, concrete consumption of future resources.

 

[Fruitloop]

'Only labour valorizes capital', in other words.

 

[deke t lefel]

the relationship between growth (quarter upon quarter) and inflation (CPI rather than RPI) is a little murky to say the least....also interest rates have to be thrown into the mix to get a better picture

if growth is running at say 0.5% and inflation at 20%, there is clearly a problem, however if growth is running at 3% and inflation is at the 2% target then there isn't an immediate problem

with regard to borrowing from the future, all money/credit notes allow the holder to purchase goods or services in the future (i.e. the money acts as a temporary store of value - future value)

the problem is that money has been given a value in its own right and ways have been developed to create money from surplus money - the surplus value that has been extracted from workers which is in excess of that which is reinvested in business

pensions have come to rely partly on this newly created money, which, agreed, does not really exist in terms of value

 

[littlebabyjesus]

the relationship between growth (quarter upon quarter) and inflation (CPI rather than RPI) is a little murky to say the least....also interest rates have to be thrown into the mix to get a better picture

if growth is running at say 0.5% and inflation at 20%, there is clearly a problem, however if growth is running at 3% and inflation is at the 2% target then there isn't an immediate problem

No. As has been pointed out, when you hear figures for growth, they are already adjusted for inflation. So, for instance, if the amount of money kicking around has tripled, but prices have only doubled, this is a reflection of the fact that there are more goods and services about than before - you have 100% inflation, but you also have growth.


Anyway, I have work to do, so I am going to have to leave this.

 

[kabbes]

Bloody hell, love detective, I hope you put your thoughts together and type quickly

 

[kabbes]

Anyway, I've now finished reading those epic posts and I thought they were great. I certainly learnt something from them. Despite common misperception, I'm no specialist in banking operations and I certainly didn't know all of that.

 

[love detective]

Doesn't this come back to a point I made on another thread about interest? Isn't it true that, strictly speaking, no loan made at interest is ever repayable - someone somewhere will need to take out another loan to pay the interest.

Not necassirly no - to properly answer your point though would require another huge digression (around value, profit, money, circulation and the inter relationships between them) which I don't really have the time for at the moment

But briefly, you assume that the interest is paid back from other loans taken out to pay the interest - which is really starting to look at the question from the wrong perspective, i.e. you've assumed in your premise what you're trying to prove/establish

The question should start further back in the analysis (and not be as narrowly framed as it is now) i.e. where and how (and whether) value is subsequently produced as a result of putting the money that was borrowed to use in a value producing capacity. The analysis should start from the flow and production (or non-production) of value, and then go on to examine the related impacts of that for money circulation and what that money actually represents (in terms of underlying value etc..).

e.g. on a really simplistic and stipped down example - if I borrow a £100 from you and agree to pay pack £105 at the end of the period. If I put that £100 by buying means of production and exploiting labour power, I may end up with a total of £110 at the end of the year. That means £10 of value has been produced and appropriated by the capitalist (with either the money supply increasing to circulate it, or the existing money supply could just circulate more often to do the same thing). Out of the £110, £100 goes to pay back principal, £5 to pay back interest, and £5 is my profit which I can then either consume away or throw back into circulation to valorise it further. All trace of the loan and interest has now been obliterated, and we are left with exactly the same situation as if I'd just somehow got the £100 without borrowing it from you and done exactly the same thing. The only difference in the later case is that the £10 value produced in the period stays completely in the hands of the functioning capitalist, where in the former case £5 ends up in the hands of the functioning capitalist and £5 in the hands of the finance capitalist (the reference to type of capitalist relate to the roles played by capital, not necessarily what they themselves are) - but overall capital has £10 of additional value and society has £110 in total of commodities distibuted in a particular way - exactly the same in both cases. Now things don't always run as smoothly as this in relation to value production & realisation and in some cases the money borrowed isn't directly employed in the production of value, but just circulates around in various guises - but my point is the underlying analysis of things like this should start from this more fundamental aspect, not the very surface/phenomanal aspect of the actual lending & borrowing itself, detached from the underlying value production within society.

But even skipping all that, I made the point that just like derivatives are a zero sum game, so to is lending & borrowing of money - i.e. if you combine the two parties to either a derivative or loan contract, everything sums to zero, it has to - i.e. in both cases it's just a series of cash flows from one to another - and in fact the flows from one party to another on say an interest rate derivative are fundamentally the same as the interest payments that would arise if the two parties just loaned & borrowed the notional amount of that derivate contract between themselves at different interest terms (i.e one fixed interest rate and the other floating).

So applying your assertion that no loan made at interest is ever repaybale (because of the interest portion) to derivatives which exhibit exactly the same type of cash flows (leaving aside the fact that in the derivative contract there is no exchange/repayment of initial principal amounts) causes a contradiction in your reasoning - i.e. on one hand you say derivatives are a zero sum game, but on the other you say the cash flows from them are never repayable as 'someone somewhere will need to take out another loan to pay the interst'. I don't think I've explained that part as clearly as I should, but not much time at the moment to do it properly

 

[littlebabyjesus]

Ok. I don't really have time either at the moment. I've been conflating 'derivatives' and 'futures'. What I was talking about was specifically futures - the buying of options on future goods - not anything else.

 

[love detective]

Bloody hell, love detective, I hope you put your thoughts together and type quickly

the thoughts come together pretty quickly, as does the typing - it's the bit in the middle where I have to translate my thoughts into meaningful words that I sometimes struggle with

 

[deke t lefel]

No. As has been pointed out, when you hear figures for growth, they are already adjusted for inflation. So, for instance, if the amount of money kicking around has tripled, but prices have only doubled, this is a reflection of the fact that there are more goods and services about than before - you have 100% inflation, but you also have growth.


Anyway, I have work to do, so I am going to have to leave this.

surely just increasing the money supply does not constitute growth - growth is measured in terms of GDP (yes, adjusted for inflation)

growth in GDP can remain at or close to 0% and inflation can still rise if caused by an external source such as the cost of imports

 

[A Dashing Blade]

. . .
But what are futures if not promises or options to pay for goods that don't yet exist? Next year's coffee crop does not yet exist.

What I was talking about was specifically futures - the buying of options on future goods - not anything else.

Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaarg!

There's a hell of a difference between a future and an option!

Top of my head, the only "option" whose underlying instrument is a "future" would be an exchange traded one on a bond or interest rate instrument.

Cartianly for coffee, the contract specification (jargon term) for the contract is (according to my Bloomberg screen) . . .

"The Coffee "C" contract is the world benchmark for Arabica coffee. The contract prices physical delivery of exchange-grade green beans, from one of 19 countries of origin in a licensed warehouse to one of several ports in the U. S. and Europe, with stated premiums/discounts for ports and growths. Calls for delivery of washed arabica coffee produced in several Central and South American, Asian and African countries"

Don't see anything about "next years crop" there.

What about a metals futures? The contract spec for the Comex contract (Comex is an exchange) is for 100 troy oz. Doesn't matter when the stuff was mined.

 

[A Dashing Blade]

. . .
Doesn't this come back to a point I made on another thread about interest? Isn't it true that, strictly speaking, no loan made at interest is ever repayable - someone somewhere will need to take out another loan to pay the interest.
. . .

Nope. Croatia Govt for example issued bonds in the early 2000's in the 5-10 year bucket which financed the Istrian Highway. The loans were repaid from taxes derived from the economic benefits of the motorway.

 

[littlebabyjesus]

Right, let's sort this out, then. I've confused terms because the original post I was responding to confused terms. What, in 20 words or fewer, is future? Am I wrong to say that it is a contract concerning goods that have not yet been produced?