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w ontario | {quote} IF debt is actually paid back, fractional reserve monetary system is not net inflationary. BUT, by the nature of the way the system is designed money supply HAS to expand to keep the system solvent to service the interest due. It is a catch 22. It is not inflationary as long as debt is paid back. But to pay back debt also requires to pay back interest. But interest payments require money. But when all new money is created via debt the money supply has to expand to service existing debt. But when all new money is created via debt the money supply has to expand to service existing debt. Expanding money supply is inflationary because an increase in money supply debases existing money supply (reduces its purchasing power). It is an unsustainable Ponzi scheme (albeit one that is able to last at least a hundred years). New debt is required to pay off old debt, because debt is how the money supply is increased to service the old debt. {unquote}
I was going to add this, but realized that you had already.
Ponzi scheme indeed. I pointed this out to a classmate of mine that now works in a bank. He looked at me strangely for a moment and then said, you know you are right, I never thought about that before!
The act of usury is nothing new. It was considered evil 2000 years ago by Jesus.
http://www.biblebelievers.org.au/usury2.htm
Edited by FF-Feeders 2/28/2015 08:57
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Loans make deposits II
