Another issue that was talked about in the interview Zapatero yesterday was the support from banks. According to the Prime Minister, the aid was not free and actually be good for everyone because the borrowed money would be repaid with interest. Coldly analyzing Zapatero's words we see a small problem with this reasoning.
First, we consider that there are three "lots" of money in our society. The state has a certain amount of money, banks and other citizens have another:
The state lends money to banks. It does not free but in the time it does, the State ceases to have (temporarily) some money and the banks who are (temporarily) go to have it. For simplicity, assume that the state loses 100 euros to banks. At that time, the state has less 100 euros, 100 euros banks have more and people we like.
Now the banks fulfill their part of the deal and used the money they received from the State to grant loans, mortgages and stuff. When money leaves the bank, the State still $ 100 less than it had in the beginning, the bank has the same money and the people we have 100 euros more.
But, friend!, Not everything is so pretty. Loans should be returned. All the money that citizens receive from the bank have it back. If interest results in, say, 15 euros, when people return the money to the bank, the State continues to be $ 100 less than before, banks will have 115 euros more than the first and citizens will have less 15 euros.
Finally, as Zapatero has promised us, the banks return the money to the state. With interest. Say, 5 euros. So the end result, once the money has come to move and no one owes anything to anyone is that the state has more 5 euros, the bank has more 10 euros and 15 euros citizens have less .
Good for all, right?
First, we consider that there are three "lots" of money in our society. The state has a certain amount of money, banks and other citizens have another:
The state lends money to banks. It does not free but in the time it does, the State ceases to have (temporarily) some money and the banks who are (temporarily) go to have it. For simplicity, assume that the state loses 100 euros to banks. At that time, the state has less 100 euros, 100 euros banks have more and people we like.
Now the banks fulfill their part of the deal and used the money they received from the State to grant loans, mortgages and stuff. When money leaves the bank, the State still $ 100 less than it had in the beginning, the bank has the same money and the people we have 100 euros more.
But, friend!, Not everything is so pretty. Loans should be returned. All the money that citizens receive from the bank have it back. If interest results in, say, 15 euros, when people return the money to the bank, the State continues to be $ 100 less than before, banks will have 115 euros more than the first and citizens will have less 15 euros.
Finally, as Zapatero has promised us, the banks return the money to the state. With interest. Say, 5 euros. So the end result, once the money has come to move and no one owes anything to anyone is that the state has more 5 euros, the bank has more 10 euros and 15 euros citizens have less .
Good for all, right?
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