I just reading an article about money. One topic is about current debt based money system. In this article I’ll share about their current debt based money system :
- Money is created as loans and thus represents debt
- The interest associated with this debt/money is NOT created as money when bank loans are made. The interest can only be paid if additional loans are created as money.
- This means there is never enough money in the system to pay bank interest without creating more debt, so this interest is essentially unpayable.
- In this type of money system TOTAL debt grows exponentially and will eventually become unpayable once new debt/ money creation can no longer be supported.
- Because money is ‘extinguished’ as loan principals get paid off, attempts to pay off the debt set up a money shortage which triggers demand for more borrowing just to preserve the money supply.
Debt Based Money Systems Inevitably Create Chronic Money Shortages
” While economic textbooks claim that people and corporationns are competing for markets and resources, I claim that in reality they are competing for money – using markets and resources to do so. Greed and fear of scarcity are being continously created and amplified as a direct result of the kind of money we are using.
For example, we can produce more than enough food to feed everybody, and there is definitely enough work for everybody in the world, but there is clearly not enough money to pay for it all. In fact, the job of central banks is to create and maintain that currency scarcity. “
– Former Central Banker Bernard Lietaer in an article titled “Beyond Greed and Scarcity , ” YES! Magazine, Summer 1997.
A key feature of debt-based money is that it has unpayable interest attached.
This unpayable interest is what makes debt-based money a ‘money of accounts’.
Debt Based Money
Debt-based money systems are inherently unstable because of the need to increase the money supply at ever faster rates as more and more money goes to pay the exponentially accumulating interest, rather than goods and services.
Debt growth is governed by the formula for calculating compound interest. This formula is based on the exponential function which is one of the most importatnt functions in mathematics and commonly used in finance.
Three Key Point
What we use for money is not nearly as important as HOW that money is brought into circulation.
We currently have private BANK FIAT- NOT GOVERNMENT GIAT – money, meaning that the banking system creates our money.
In other words we have private bank credit or interest bearing loans serving as money and it is why we have increasing levels of national (or publlic) debt.
If the government created our money we would have NO PUBLIC DEBT. However, we MIGHT have lots of inflation if no attention were paid to the rules and principles of monetary science and the process of extinguishment. But if this were to be done, we would have a true, inherently stable ‘money of exchange’
Many design flaws in our current UNSTABLE debt-based money creation system
– Unpayable, accumulating interest
– Exponentially increasing debt
– Growing shortage of ‘money’ relative to debt
– Inherent instability caused by the attempt to defy mathematical law
Source :- TheTwoFacesofMoney