If you take out a lone you get money in exchange for signing a contract that forces you to pay everything back [say] 3x over 30 years.
The party giving you the money loses nothing, they trade one kind of paper for the other.
They get more money in return because there is a small risk you wont pay. (if they get 1/3 they have their money back)
This would be sensible if the bank had this money. They don't, they bring nothing to the table and give you freshly minted fiat.
This is only possible because you've signed on the dotted line.
If you are buying a house the risk you wont pay is tiny! Government could easily force you to get insurance and give you an interest free lone that you won't need to pay back.
This would bring some serious fiat into circulation.
If you take out a lone you get money in exchange for signing a contract that forces you to pay everything back [say] 3x over 30 years.
The party giving you the money loses nothing, they trade one kind of paper for the other.
They get more money in return because there is a small risk you wont pay. (if they get 1/3 they have their money back)
This would be sensible if the bank had this money. They don't, they bring nothing to the table and give you freshly minted fiat.
This is only possible because you've signed on the dotted line.
If you are buying a house the risk you wont pay is tiny! Government could easily force you to get insurance and give you an interest free lone that you won't need to pay back.
This would bring some serious fiat into circulation.
Ask Gaddafi what happens next.