Continuing on the discussion from a few days back, this article explains the eventual outcome of a debt based monetary system, where essentially all money is created via commercial bank loans. Since all money is created via loans and all loans have an interest component, the debt always grows larger as interest accrues. It has to, because if loans are paid off faster than new loans are being initiated, the money supply contracts making debt even harder to service. So debt always has to expand. The only way to pay the interest burden from old loans along with principal, is to loan more new money into existence, the Ponzi scheme extended.

But eventually the debt becomes so burdensome and the debtors are in debt as much or more than they can already service, debt can no longer expand in the usual way. Enter central banks and QE along with ZIRP. Final desperate attempts to keep a system afloat that is destined by its very design to eventual failure. Mathematics makes it so. The article does not give the explanation I just gave, but gives the results as the system gets long in the tooth.

Mathematically Impossible

John