Published on Global Research.ca, by Amanda Morales, Oct. 18, 2010.
… Ethical considerations about the inherent parasitism of usury would be certainly appropriate at this stage: money holders lend money to those who lack it, who in turn become their slaves. But usury also presents a practical mathematical problem: banks create only the principal but not the interest necessary to pay back their loans. This results in a chronic scarcity of money that affects all the players in the system, as the money to pay back the interest on all the loans does not exist. As a result, we all must compete in a zero-sum game to earn something that simply does not exist. Money is earned by some at the detriment of others who are left without, in what increasingly feels like a cut-throat competition that greatly amplifies social conflict and wealth imbalances.
The constant expansion of the money supply necessary to alleviate a chronic scarcity of money is the chief cause of inflation, a stealthy confiscation of wealth from money holders. The monetary system could be compared to a musical chairs game: as long as the music plays (both money supply and economy expand) there are apparently no losers*.
The amount of debt-money in the system must continually grow to minimise the risk of a dangerous deflation. We can now understand how all the talks we hear in mainstream media about the need to reduce debt are in fact just misleading doublespeak. Debt is meant to be sustained because the whole system is based upon it. Any reduction of debt (either by repaying it or writing it off) would increase the shortage of money, with catastrophic consequences in a dysfunctional economy like ours.
Despite all the efforts by central bankers to keep the game going, the money supply in many Western economies is currently contracting and millions of people are left standing in the cold.
As debt is repaid, the fake principal gets progressively destroyed and the interest remains as a profit for the bank. If we consider that on large loans repaid over very long time frames (such as mortgages) the amount of the interest charged can easily exceed the principal, we can start to grasp the colossal proportion of this fraud as well as its intrinsically parasitic nature.
Armed with this knowledge, it becomes clear that the monetary system imposed upon us is bankrupt by design. An interest-based lending system could only work if all the money gained through interest were spent in goods and services (so that the borrower can earn it again), not hoarded or lent again. Hoarding money or lending it to different borrowers at the same time (like banks are doing today) causes shortages of it and eventually leads to mass defaults.
I think that the privatisation of money is the main underlying cause of poverty, economic slavery, underfunded government and an oligarchical ruling class that thwarts every attempt to shake it loose from the reins of power.
* Actually there is a loser: it is the environment being destroyed by the unsustainable development required by a profit-driven economy. (full text).
(Amanda Morales is a Venezuelan financial analyst who has lived and worked in Europe for several years. She can be contacted by e-mail).