Acutally, No.  A very common reason (if not the most common) for refinancing a loan is so that you pay LESS overall.  Here's an example: Imagine that you have clocked up a $10,000 unsecured debt on a credit card at 15%pa.  Instead of paying this high rate, you go to a bank and take out a $10,000 loan (secured against an asset of yours) at 7% and pay off the credit card.  You have now made the interest payments smaller and thus will pay less.   Another example is when a central bank lowers its interest rate which causes the other banks to offer lower rate loans-- people often refinance their existing loans to take advantage of the new lower rates.


I've already demonstrated in my first post how it is possible to payback interest even though the total amount due is greater than 100% of the hard currency supply.  It's possible because we can arrange loans such that interest due by different parties will cancel each other.  I gave the simplest example with just two protagonists, but in the real world it involves more actors, eg: the banks.  In the real world it is the banks which handle the cancelling of interest.  This results from the fact that the banks continuously borrow off each other to balance their books and a bank only pays back what is due after the cancellation of interest owed to each other.


What does this particular example prove about anything in general?  If you're stupid enough to take out a long at 5% per month and have no hope of paying it back then you deserve to go bankrupt!   I've not said that ALL loans can be paid back,  I've only said that loans taken out wisely can be paid back.

For your general enlightenment:  If you can earn more profit than what you will pay in interest from money supplied by a loan then the loan is a wise move (of course you have to also balance it against the risk involved in deriving your profit-- equations that compute this are very well known).  If you will not earn more profit than what you will pay in interest than the loan is a very bad idea!  It's that simple!  Owing debt baring interest can make you money in the right circumstances.

What you say is most likely true, ie.the bank wouldn't accept your offer to clean their windows.  However, what you can certainly do is go to another bank and tell/prove to them that you have a started a new window cleaning business that is profitable and because of this predictable income get them to pay of the existing loan by taking out a new loan.  This, by-the-way, is called refinancing a loan and is done all the time.

In case you didn't know: supplying, buying and selling debt is the biggest business on the planet!  Without debt almost none of our economy would exist.  Over history the use of debt, (ie: the ability to get something now and pay for it later with interest) is the way by which we have financed the development clean drinking water, abundant food, education, modern medicine, modern transportation, computers and telecommunication, etc, in fact just about everything that you use.   Note that the countries with the least developed banking services are the most backward, undeveloped third world countries that exist.  There is nothing wrong with debt that is used wisely.

Regardless of all this, the whole point of my original post still stands: I supplied an example which demonstrates cleanly and simply that the claim that it is impossible to ultimately pay off interest in a world with a finite money supply is NOT true.

The reason why I had Ben buy the tree was to keep the example simple-- ie, it used only two protagonists.  Obviously in real life there are maybe many other people involved, eg: Ben would loan the money from a bank as you pointed out.  However, it is conceivable that such a situation as I outlined could occur-- eg: Ben bought the trees because Satoshi didn't need them all (all the wood was really worth 70BTC whereas Satoshi only wanted 55BTC worth), so Ben kept some himself for his own cooking, warmth, to build a hut and so that he could sell some to other people.  In fact I know of a situation where something like this happened in real life.  A while ago in my country some of the banks started selling off their physical buildings to investors with the condition that they be rented back to them, the bank even supplied a loan for you to buy them if you didn't have the cash.

Regardless of this though, the point I was trying to make is that the claim that it is impossible to pay off interest in a world that is based on a finite money supply is wrong.  This example clearly disproves this claim.  By-the-way, it is not the only way to disprove it, just one of the simplest examples.  Another example that is easy to describe is one where the person who owes the interest pays it back with labour or goods instead of money.  I didn't use this because I wanted to show that you could destroy the interest with "money" alone (where money includes debt in its definition).

What you're saying still isn't true because you are forgetting that loans can be used to cancel each other.  Here is a simple example:  image that Satoshi who is cold and has a broken arm has 50BTC, a forest of trees and food while hungry Ben has nothing but an axe.  Ben borrows 50Btc from Satoshi to be repaid at the end of the month with 10% interest.  Ben then buys the trees and some food from Satoshi for 50BTC.  Ben chops the trees into firewood which is now worth 55BTC.  Satoshi buys the wood with 50BTC cash and agreement to pay the extra 5BTC at the end of the month (effectively he is borrowing 5 virtual BTC from Ben).  At the end of the month Ben pays Satoshi 50BTC and they agree that the two debts of 5BTC cancel each other and that everything has been made good, ie: there is no debt remaining to anyone at all.  

The important thing to note is that without the use of loans Satoshi's trees would have never been chopped, Satoshi would remain cold and Ben would have starved!  There is nothing inherently wrong with interest bearing debt as long as it is used wisely.  Everyday around the world interest bearing debt facilitates trade that would not occur otherwise.