Every Dollar You Spend Is Credit-10

The credit system is a continuous cycle of borrowing and lending. All money is borrowed money. Even when you use your own cash, you are borrowing money—from yourself!
Spending money is borrowing from your funds available to purchase income-producing assets to get goods and services. The cost of those funds is the lost opportunity you could have gained had you invested the money.
Now before you start writing me letters about how your children really like to have dinner on the table, I’m not saying that you shouldn’t spend money!
It’s important to have food and shelter, transportation, and yes, even entertainment and luxury items. However, recognize that using funds for these purposes necessarily means they aren’t available for investing. It’s not a judgment on your personal spending habits to say that a
dollar saved is one that can’t be invested. It’s an illustration of the simple fact that all dollars come from the same pool of money. To keep the credit cycle going, borrowers need to repay what they owe.
Every borrower who repays on time allows the lender to profit, which allows the lender to pay his or her own bills, which allows the lender’s lender to do the same. Thus when someone breaks the cycle by not paying as agreed, the entire system suffers.

The largest single lender in the country is the Federal Reserve Bank (“The Fed”). The Fed loans money to national, state and local banks at a nationally published interest rate called the Discount Rate. The Discount Rate is always lower than Prime Rate—which is the rate banks
charge their best customers. The Prime Rate is usually reserved for wealthy individuals and major corporations. Other borrowers are offered an interest rate higher than prime. How much higher varies depending on the type of loan and the borrower’s credit. Who lends money to the Fed? We, the consumers do. When the Federal Reserve needs money, they either print more (I don’t recommend this strategy for you) or issue bonds. When the government issues bonds, they are collecting the money they’ve released into the system back. Consumers buy bonds as an investment strategy—which the government guarantees. The government pays interest on these bonds—the same dollars they released into circulation by printing money. The Fed can make as many of these loans as they feel is necessary for the overall economic strategy—and can do so without a credit check.
Next time i'll discuss about the faces i mean types of credit.