Wednesday, October 1, 2008

The Growth Misconception: ‘Money based on interest can grow forever.’

The Four Basic Misconceptions

Money is one of our most ingenious inventions. It helps the exchange of goods and services and overcomes the limitations of barter, thereby creating the possibility of specialisation, which is the basis of civilisation. However, throughout most of history, the circulation of money has been based on the payment of interest. Interest leads to compound interest. Compound interest leads to exponential growth. And exponential growth in turn is unsustainable. Therefore, in order to understand how our monetary system works as an ‘invisible wrecking machine’, we must first understand four basic misconceptions about money which almost everybody holds.

Posted by malct @ 05:02 PM (1112 views)
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11 thoughts on “The Growth Misconception: ‘Money based on interest can grow forever.’

  • Interest and Inflation Free Money (Book), by Margarit Kennedy
    Money is one of humankind’s most ingenious inventions – and also one its most dangerous. Interest and Inflation Free Money offers a clear, simple explanation of how financial policies shape the global markets – and how interest wrecks cultures, ecosystems, and economic systems.

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  • planning4acrash says:

    Its old, its the Babylonian system, and all major religions call it usery, a sin, so this is an old battle. The USA shook it off for a while with its gold standard and did very well.But the invention here is not money, it is the fiat manipulation of money

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  • planning4acrash says:

    Money is a spontaneous use of a trusted common medium of exchange 2facilitate commerce without barter. Be it Gold, silver, yard sticks, shells, whatever society considers the most reliable store of wealth, i.e. the least likely 2 b inflated or manipulated

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  • planning4acrash says:

    The problem began when government took over deciding the currency issued it, because, unlike we the people, government tend 2 choose a currency that can be manipulated, by them,2 consolidate their power. We let them get away with it via our ignorance ofit

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  • japanese uncle says:

    p4c

    We the people sounds a bit too obsolete. ‘We the useless eaters’ sounds more fashionable, these days.

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  • JU is in great form today.

    Anyway, fabulous article. Have you thought of sending it to The Sun editor as front page material? You never know . Headline could be :
    Read This First You Peasants.

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  • “What few understand is that every price we pay includes a certain amount of interest. The exact proportion varies according to the labour versus the capital costs of the goods and services we buy. This ranges from a 12 % interest component for rubbish collection, (because here the share of capital costs is relatively low and the share of physical labour is particularly high) to 38% for drinking water and up to 77% for public housing.”

    “On the average we pay about 40% interest in all the prices of our goods and services. In medieval times people paid ‘the tenth’ of their income or produce to the feudal landlord. In this respect they were better off than we are nowadays, where almost one half of each dollar goes to the people who own capital.”

    That’s one in the eye for all the smug posters here who claim to avoid borrowing. They all borrow by proxy.

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  • good point nickolarge – I believe also that men only worked about 12 weeks a year to earn money to trade with

    any clues?

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  • semi-detached-from-reality says:

    There is a superb book out there detailing the above arguments for the Medieval system over the present day shocker: ‘How to be Free, Tom Hodgkinson 2006’ Recommended reading. Sorry if this has already been discussed, I have been off-site for a while, that graph at the top got a little depressing. It’s looking a whole lot more healthy now though 🙂

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  • planning4acrash says:

    This is why income tax is immoral. It is a charge for interest paid by government, to central banks, to pay them to interest on money they create from thin air, that government could create for free. But they should of course b limited & not rely on fiat.

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  • Sabine K Mcneill says:

    Exponential growth is indeed unsustainable. See “Understanding Exponential Growth” on http://forumnews.wordpress.com/understanding-exponential-growth/

    But WHAT grows exponentially?

    1. the money supply as a whole, i.e. all of a currency in circulation see http://tinyurl.com/49wvky

    2. the credit share in the money supply see http://greencredit.files.wordpress.com/2007/01/green-credit.pdf

    3. the National Debt see http://tinyurl.com/44ubcs

    As a consequence, many other items grow exponentially, too. But ‘growth’ is the imposed myth that most people buy into…

    We’re trying to get the Treasury Select Committee to look into this via a public online petition. See http://tinyurl.com/666rwd

    Might you be interested to click and see for yourself?

    Sabine
    Organiser, Forum for Stable Currencies
    http://forumnews.wordpress.com

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