To say that a state cannot pursue its aims, because there is no money, is like saying that an engineer cannot build roads because there are no kilometers.
Ezra Pound, economic historian and poet
There existed a thriving community where the people happily display their yams, eggs, tomatoes, chickens, and corn on their market days.
Whenever there was a storm that damaged the roof of any of the dwellers the people easily volunteered to help, knowing that if they themselves had a problem one day, others would come to help them.
No currencies ever exchanged hands.
One market day, an elegantly dressed stranger with a black leather jacket came and observed them.
When one farmer wanted a basket of yam ran around to gather five crates of eggs in exchange, the stranger laughed, “Foolish, ignorant and uncivilized people!“
A community member overheard him and challenged him, “Can you do a better job at gathering crates of eggs?”
The stranger smiled and responded: “I can’t handle eggs. But I can eradicate the chaos in your trade“. He observed their population and said, “bring me two yards of leather and gather the people. There is a better way to handle trade.”
The people took the matter to their chiefs and king, and they all agreed that it was a fantastic development for the community. They complied, and the stranger cut the leather into pieces and put a stamp on each piece. He then gave ten pieces to every family and declared that one piece represents the value of a crate of eggs. “Now you can trade with the piece of leather instead of those eggs“.
The people jubilated and were impressed by this smart development.
“Please note”, the stranger added, “after twelve full moon, I’ll return and I want all the families to bring me back an extra eleventh piece”. It’s a token for the improvements I made to your community.”
After twelve full moons during another market day, the stranger arrived and waited for the people to queue and pay him the eleventh piece.
However, he noticed a family begging for alms, having lost everything during a storm. The people were focused on their eleventh piece obligation and passed by without many glimpses at their neighbor’s challenges.
While the leather pieces were created the elusive eleventh piece interest was not created, but payment for the efficiency brought to the community seemed reasonable and was exacted nonetheless. The stranger watches the drama in the kingdom, unaware of the impact his innovation caused.
To an extent, this illustrates the competition to obtain the money necessary to pay the interest in the current money system. Somebody will have to lose his piece for somebody else to have it and make the interest payment.
How does a loan, whose interest is not created, get paid?
You’d need to use up someone else’s principal.
This is how the bank-debt monetary system works.
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