Money and the Fiction of Interest

Please, I beg you, correct me if I'm wrong. (Will, I'm looking at you here, pal!) I'm not an economist, have never worked in a finance, and can hardly balance a checkbook. Still, there's less to the concept of money than banks would like you to think; that's how they intimidate you into submission.

Between the beginning of organized community-based civilization and the adoption of monetary currency, people traded to acquire what they needed. The fisherman traded his fish for grain, the farmer traded his grain for wood, et cetera. This worked well until someone had all the grain they needed, and the farmer had nothing else to trade with. So along comes the banker.

The banker whips up some money; for example, $1000 for everyone. He affirms that he owns the money, but he'll gladly borrow it out to the community for a small fee, which he'll collect at the end of the year. The bank even offers a generously low interest rate of 5%. Not bad, huh?

Yet, once the year is over, everyone discovers something: even though they all end the year with exactly as much as they began, nobody has enough to pay the borrowing fee. So the banker makes them an offer. Pay attention, because this next part is the swindle.

Everyone in the community borrowed $1000, and now because of interest, they all owe $1050. The bank then takes back all the money that exists, leaving everyone with no actual way to pay their debt. The bank records that everyone owes $50, then lends out another $1000 to everyone for the upcoming year, still with 5% interest.

So even in a best-case scenario that assumes everyone in the community ends the year with as much as they began, debt is still perpetual. In a worst-case scenario, of course, a few people are able to pay their debt back, most are in perpetual debt, and a few are bankrupt and left to starve.

Today, banks operate on the same principle, but without the inconvenience of tangible, physical money. Currency is nearly completely theoretical. It exists electronically, being created out of thin air. It's fiction. This is why if everyone withdrew all their savings at the same time, there would not be enough money for everyone. It is a debt-based system.

Unfortunately, money is the dominant system of our civilization. And while I do support a money-free society, it is simply not possible in the near future. Realistically, even a complete collapse of the current financial system wouldn't be enough to implement something different. It is still quite impossible to buy food and shelter with good intentions, so whether or not money is a good thing, it is a wretched necessity of the present. And yet, it doesn't even exist.