OK
You've settled down a bit, I must admit I was a bit baffled by someone who could use 'non sequitur' yet struggled with prasee, apols for the ad hominems.

The exponential function implicit in compound interest does represent potentially infinite liabilities. All mortgages are subject to compound interest which is why you end up paying back 3x what you borrowed, or there abouts - or why credit card debts 'spiral out of control' when people can only afford the minimum interest, not capital repayments. All those stories of people borrowing 100s, yet owing 1000s?

Most 'money' is not spent on goods and services, it's shuttled around in the shadow banking system, iirc something like 95%+?

You've lost me on your logic in the scenario re 'put money on deposit' - what about the scenario where no one can repay capital and there is effectively no money - not the same thing at all.

At the moment there are more bad bets out there than there is money to repay - I don't see the scenario about everyone "banking" playing out.

Negative interest rates is an interesting one, it's been muted as a possible solution to the deflation we've just hit. I don't see people putting money in a bank when they only get back 98.5% (e.g. with nominal rates of -1.5%) unless this was to guarantee they got *something* back. This would be effectively like paying the bank 1.5% to avoid having to put your cash under the bed. Might be an option in the future.
(Countryslicker, Wed 22 Jul 2009, 15:16, Reply)