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Well imagine if there is only $55 worth of currency in circulation. Or better yet only $52. The lender ends up with all the currency in the end (and maybe some

Well imagine if there is only $55 worth of currency in circulation. Or better yet only $52. The lender ends up with all the currency in the end (and maybe some that does not exist yet). The response is that currency is printed. If the production of society increases at the same rate as interest, then there is no problem, but that is rarely the case. This is why there is more debt than money in the world. Currencies are then deliberately debased in order to pay back debt quicker. https://www.cato.org/policy-report/julyaugust-2011/deficits-debt-debasement https://www.cato.org/policy-report/julyaugust-2011/deficits-... (I realise limiting the money in circulation to $52 is an absurd formulation, but using these crazy limits helps understand the larger system) The difference between real growth and the amount of currency is the "metabolism" I referred to earlier.

eru 6y ago
It seems you are somewhat confused. First, central banks usually send any profit they make to their governments. (See eg https://www.google.com/search?q=fed+profits+to+treasury https://www.google.com/search?q=fed+profits+to+treasury for lots of examples.) The governments then spend the money. There's no endless accumulation. Second, there were long stretches of time in the past when inflation was zero or even negative. Have a look at the so called 'Long Depression', a period of rapid productivity growth in the latter part of the 19th century. Just look electronics usually fall in price these days, almost everything slowly fell in price back then over long periods of time. But banks were just as 'evil' as they are now, and people paid interest. Third, money doesn't have to be based on debt, either. Historically money based on commodities was common. But in Japan their central bank recently bought stocks in return for newly 'printed' money. There's no obligation on anyone to ever buy the stocks back from the central bank.
- TheUndead96 6y ago
  Thanks for the clarification.

eru 6y ago

It seems you are somewhat confused. First, central banks usually send any profit they make to their governments. (See eg https://www.google.com/search?q=fed+profits+to+treasury https://www.google.com/search?q=fed+profits+to+treasury for lots of examples.) The governments then spend the money. There's no endless accumulation. Second, there were long stretches of time in the past when inflation was zero or even negative. Have a look at the so called 'Long Depression', a period of rapid productivity growth in the latter part of the 19th century. Just look electronics usually fall in price these days, almost everything slowly fell in price back then over long periods of time. But banks were just as 'evil' as they are now, and people paid interest. Third, money doesn't have to be based on debt, either. Historically money based on commodities was common. But in Japan their central bank recently bought stocks in return for newly 'printed' money. There's no obligation on anyone to ever buy the stocks back from the central bank.

TheUndead96 6y ago
Thanks for the clarification.