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I'm no economist, but my understanding is that it's the nature of our debt based financial system. The money that exists in our system (except for an insignifi

• imtringued 4y ago
  It is not the debt based system itself. It is the fact that when no growth occurs or there is even a decline the interest rate doesn't fall low enough, you get a liquidity trap where people keep their money in liquid bank accounts and don't spend it. The money supply in circulation decreases while the money supply in stagnation increases. People save more than others want to be in debt. So the government steps in and "restores" the balance by forcing itself to go in debt. The circulating money supply is necessary for employment and paying off debts. You need money to be in circulation and the way to do that is by introducing a demurrage fee or negative interest rate which is only paid when people hold onto liquidity for a prolonged period of time. The problem also exists with a gold standard because people hoard gold instead of letting it circulate.