The Perpetual Debt Cycle

4. What needs be changed to allow the creation of a "sustainable economy"?

The video “Money as Debt” discusses the fact that because the general population has no conception of the term ‘exponential’ the fact that the U.S. experiences 3% economic growth per year appears to be a good thing and convinces the masses that our current system is working and working well. Because the 3% is a 3% increase from the previous year’s total, this is a 3% exponential increase. In order for the economy to sustain its similarly exponentially increasing amount of debt, it must continue to grown economically exponentially as well—which calls for the exponentially increasing consumption of a limited amount of economic resources. Because the growth is exponential and the amount of available resources is limited, it seems that in the current system there is no way to sustain our lifestyle forever.

“Money as Debt” proposes several ideas that could help us move away from this debt cycle and the resulting rampant consumption of our resources and move towards a sustainable economy.

One idea is to advocate for honest money which the video defines as gold- or silver-based money. This would seriously limit the amount of fake money that banks can produce because all of the fake money produced by the bank would need to include some element of value in the form of gold or silver. Currently, banks manufacture millions of dollars in paper money. Because we have an essentially unlimited supply of paper, the banks can essentially print off as much money as they need to finance the inexhaustible amount of loan applications on which they depend to run their empire.

Another interesting idea is the concept of a local exchange trading system. The banks print off enough money to cover the cost of the loans allocated but not enough money to cover the high interest rates associated with these loans. This results in an economy in a perpetual cycle of borrowing just enough money to never be able to pay back the debt in full. In a local exchange trading system banks loan with no interest. Instead of depending on the practice of usury (formally considered an immoral practice) to make money off of money loaned, banks could require the debt be paid by labor. A certain amount of work would have a specified monetary value that would allow the individual to pay off his or her loans while simultaneously benefiting the community rather than solely benefiting the banks and perpetuating the economic debt cycle.

The video “Money as Debt” calls for change and makes the argument that the current economic system is essentially a form of slavery. The only difference between this new form of slavery and its historic connotations is that under the current form, it is impossible to distinguish as a form of slavery because the relationship between the citizen and the bank is an impersonal one, whereas in the traditional idea of slavery there is a clear identification of master and slave.