Thanks for the video. It’s a good start. But it was still not simple enough for me 
. I have a few problems with it that i’d like to discuss. (ping @Julianek be glad if you joined the discussion)
What is the difference between money and credit? Money is issued by the central bank and credit by commercial banks? In the end, even if the amount in your account is a mix of both, it’s virtually indistinguishable for you.
The credit example that speaks to me is the one with me getting a beer and owing the bartender. This means, in order to create credit, someone has to give something material to me, and I owe him money. This obligation is then as good as my credibility, it’s not the same as actual money. The bartender could use my IOU to buy something, but everyone would be suspicious to accept it, and would surely discount the face value of it.
If we applied the same logic to buying a house, I would get the house from a seller, and the seller would get the promise of me paying him back in the future. But instead, there is a bank, the seller gets money (for him it’s not credit, nobody owes him), and I owe the bank. Why can the bank produce money, or something that is indistinguishable from money?
It’s OK if the bank wants to take over the role of controlling my credit-worthiness. But then it should issue its own notes and give them to the seller, instead of central bank’s money. A commercial bank is pooling the debts/risks of all its clients under one roof and under the same note. And it seems the central bank is pooling the risks of all commercial banks by allowing them to issue the national currency.
How can there be economic growth stimulated by credit? Productivity decides how much stuff there is. Getting a beer on loan does not mean there is more beer. So the people who have stuff have to give it to the people who don’t, hoping that these people will work for them in the future. By consuming today and getting into debt, you’re voluntarily becoming someone’s slave.
Allowing consumption for people who otherwise couldn’t afford it today, creates more demand. So, if supply can grow, more stuff will be made, and people will become even more indebted. Eventually, for the debtor this situation is only attractive if the interest he has to pay on his debt is lower than the benefit from the earlier access to “capital”.
But if more stuff cannot be made (real estate can only grow so much), then the increased demand will raise the prices to unnatural levels, right? But this can last for decades, until the next depression.
Is the previous debt cycle really over? The video says we had the last depression in 2008, and since then the central banks have been printing money (as an inflationary measure) and cutting expenses, restructuring debt & raising taxes (deflationary measures). But has the economy really cleared itself off debt? I don’t think so. You can still get a super low mortgage loan. So how is it?