I find it so strange that most people do not know how the banking system works when it practically runs the world, the more you understand it the more you see how crazy it is. The concept of interest (usury) is selfish and immoral.
Our economy relies on debt. When you take out a loan the bank technically creates the money out of thin air by adding numbers to your account, this is basically just an “I owe you”. You agree to give back this newly created money (principal amount) plus interest. The circulating money in the economy consist of just “principal” money (loans from the bank), therefore there is not enough to pay all the debt (P≠P+I) unless the banks spend the interest money they receive back into the economy (which they don’t), obviously the debt gets payed gradually and it’s this time lag that keeps the economy going. But this system just creates more debt!
Now, let me explain how they make money out of thin air!
Person A deposit £10,000 in bank
Bank must reserve a fraction of this (10%) and can loan out equivalent to 90%
Reserve= £1000 Excess= £9000
Person B gets a loan of £9000 and pays Person C
Person C deposits £9000
Reserve= £900 Excess= £8100
Total money= 10, 000 + 9000 = 19,000
9,000 was made out of thin air!
A few questions I have about our monetary system:
1) Why do governments CHOOSE to borrow money from private banks when they could create all the interest-free money they need? (tax money would go further because there will be no government debt!)
2) Why must debt=money, can’t we just have permanently circulating money?
3) How can a money system that is dependent on perpetual growth be used to build a sustainable economy?
I hate that the economy is utterly dependent on bank credit, because that put so much power in the hands of banks as they can choose who to loan the money to and which corporations to support.
Short video explanation: https://www.youtube.com/watch?v=eWl7Mb49vSk