LEVEL I: Basics

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QUESTION C: Which criteria must be met to avoid systematic redistribution and the need for exponential growth?

Since compound interest is exponential by nature, a system in which all circulating money is subject to interest and compound interest must grow exponentially with the same inevitability. If growth and resource consumption don’t keep up with the interest rate, interest payments can be subsidized temporarily by lowering the general standard of living – the resulting decrease of purchasing power, however, jeopardizes further growth. This leads to a vicious circle, which ultimately results in the system’s collapse.

In the current financial system, three elements interact fatally:

– Since money is only brought into circulation through loans, all money issued is interest-bearing.
– Since the interest rate is determined by a private banking cartel, the interest charged is arbitrary and not market-driven.
– Since money can grow exponentially without equivalent risk and only a few are allowed to issue money, the profits from interest only benefit a minority.

To break the spiral of compulsory exponential growth, the interaction of these factors needs to be stopped.

No OPTION 1: Voluntary interest waiver

Effects: Eliminating the need for growth by eliminating interest charges – interest rates and number of beneficiaries therefore irrelevant.

The idea of waiving interest voluntarily has already been implemented in a number of alternative bank types today – however, since the waiver only applies to private depositors and is exercised in a system in which all money issued already bears interest, the effect can only vanish into thin air. Additionally, the relatively low popularity of these banks raises fundamental doubts about whether the problem can be solved on a voluntary basis to begin with.

Waiving interest is also one of the central features in Islamic Banking.

No OPTION 2: Ban on interest

Effects: Eliminating the need for growth by eliminating interest charges – interest rates and number of beneficiaries therefore irrelevant.

To be effective, any ban on interest must certainly cover money creation by banks as well. Since in our global money system, interest also serves to control the money supply, a ban on interest would have to include numerous changes to other system parameters. It is, however, impossible to ban interest without the cooperation of higher authorities, and to this day, a country where such a measure is seriously considered by the legislator has yet to be found (see above).

No OPTION 3: Money creation by the government

Effects: Interest payments benefiting the general public – eliminating the need for growth as interest flows back to the market participants via government spending – interest charges and actual rates therefore no longer system-relevant.

By exercising the exclusive right to issue money, the government gains access to an interest-free medium of exchange. As the government no longer needs to get into debt, the taxpayer no longer has to pay any interest on the government’s borrowing. While individual loans are still subject to interest, the interest flows into the budget and benefits all participants. As with all monopolistic systems, money creation by the government is prone to abuse, but at the very least, interest rates and interest volume are subject to political control.

The basic requirement for governmental money creation is the political consensus for substantial amendments to legislation – the necessary political will, however, is nowhere to be seen.

Yes OPTION 4: Market participants can issue and circulate money

Effects: Eliminating the need for growth by eliminating interest charges (as all participants gain access to interest-free money) – interest rates and number of beneficiaries therefore irrelevant.

It goes without saying that market participants will only be willing to pay interest if they have no other options to acquire the currency they need: Allowing market participants to issue money themselves removes the necessity to take out interest-bearing loans.


– To create an alternative money system in which all market participants can issue interest-free money, and which doesn’t require a higher authority for implementation.

– To ensure that the alternative system is used instead of the current money system, therefore REPLACING it.

« Prologue LEVEL II: Creating Interest-Free Money »