Central Banking, Usury, and the Growth Imperative

It seems a difficult thing for people to accept, but the present global debt-money system contains within it a growth imperative. Because money is created by banks as interest-bearing loans, debt grows exponentially as time goes on (the compound interest formula is exponential).

How is it possible for every debtor to pay their loans WITH INTEREST when the money supply does not grow except by the creation of more debt by the banks?

Every actor in the economy must then compete for that insufficient supply of money in order to keep from defaulting. Hence, they must do all they can to expand production, sales, and profits. They must control their markets, both markets in which they sell their products and markets in which they buy their inputs.

That is why the environment is being destroyed, the social fabric is being torn asunder, and the economic product is being increasingly maldistributed. This monetary system REQUIRES that there be many losers.

Under central banking, there are two choices:
1. Keep the money supply pumped up by making additional credit (money) easily available, or
2. Let the economy contract as defaults mount.

The first leads to hyperactivity and inflation. This hurts those on fixed incomes.
The second leads to depression. This hurts small businesses and those who have little financial net worth and live from paycheck to paycheck.

The central banking usury system puts us between a rock and a hard place.

Interest (usury) between two parties to a loan is one thing; interest built into the foundation of a credit-based monetary system is quite another.

There’s a good economic reason why three major religions (Judaism, Christianity, and Islam) have banned usury. Now the economists need to understand it.

7 responses to “Central Banking, Usury, and the Growth Imperative

  1. Pingback: Apocalist #1: The Hunger Games | the Interesting Times

  2. I don’t know why alexa sent me over to your but I must say I have been actually captivated by the content you have together. How many years did it take to begin to get this many to your page? I am pretty new to this WWW thing.


  3. My brother in law would really appreciate this blog post. We were just discussing about this. hehe


  4. Money (or credit…same thing) is like oil and gas to an engine. If you “choke” an engine from gas it will stop operating. If you don’t provide oil (credit) to the engine it will seize up.

    As the engine grows in size one must provide more oil and gas to the engine.

    If you provide too much gas you flood the engine.

    So Marcus’ question is very interesting in that he seems to be seeking a method of automatically providing just the right amount of oil and gas to the economic engine so that it operates at an optimum level.

    Problem… a really big problem.


    It’s a “medium of exchange”, a “store of value” and a measure of “what things are worth”.

    All of the above are human conceptions.. in other words.. beliefs.

    Since a good number of humans believe that a variety of religions teach various unprovable stories based on supposed happenings thousand of years ago, the belief systems of Man are not necessarily aligned with the reality of today.

    So the very nature of Man’s belief systems works against the idea that there is a form of money which is unalterable. Gold has served that purpose for thousands of years because apparently Man (read politicians) couldn’t inflate it, it was scarce, and it didn’t degrade like other elements.

    Problem with gold is that when the economies expanded and the gold supply didn’t then the economies were “choked”.

    So along comes paper “fiat” money backed by the word of the central government; this is quickly being overtaken by “digital” money.

    As long a people accept the paper or digital money things work. If people lose faith in the money, (like the U.S. dollar) the world economy will undergo a contraction which is similar to running your 427 engine at 5000 rpm without oil.

    Belief in money is similar to belief in religion. When the belief in Isis died so did the belief in the power of the pyramids.

    In other words.. it all in our minds.

    Cheers.. ERic


  5. Is anyone aware of any System Dynamics models that represent the underlying structure of our current monetary system: money stocks, flows, creation, distribution, savings, investment, etc. It would certainly be instructive if such a model could demonstrate through simulation the growth imperative but also the cyclic boom-busts with increasing amplitude that are described on this blog.

    I am aware of a very early (pre-digital computer) attempt – the MONIAC (Monetary National Income Analogue Computer). http://en.wikipedia.org/wiki/Moniac.


  6. Pingback: sustento.org.nz » Blog Archive » The Nature of Money

  7. Tom,

    The question is do the economists understand it. The bankers i speak to certainly don’t. The camp that supports a return to gold just see fiat money as a rip off without understanding the interest aspect of it.

    There is also the problem of offering an alternative to the system itself. Local currencies are all very well but how is the main system going to be dealt with?

    There doesn’t seem to be a great deal of consensus around this.

    Any thoughts?


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