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Sunday, March 15, 2009

Money in existence

We have money because private, profit-making institutions (banks) provide it as a business service. The money we use is thus not a neutral mechanism provided to us purely for the benefit of facilitating exchange.

All our money is lent into existence and it comes into circulation because banks want to make a profit through the interest that borrowers have to pay for using it. At the time that the banks create the money (as debt) they do not create sufficient to pay back the interest.

Bank debt money is thus always in chronic short supply. The only way that this money system can keep going is if there is a constant expansion of bank debt money, an expansion rate that is greater than the amount needed to pay back the principal plus the interest.

This is the force that drives our economies and why every economic agent and entity calls for more growth.

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