We have to move away from this crazy system where money is, by government fiat, created as debt by commercial banks – reads the letter by Steve Cassidy, entitled “The merry-go-round of debt” in the Guardian on 23rd September 2014.
Here’s an extract:
[The] term “over-indebtedness” makes no sense in 2014 where, as finally made explicit by the Bank of England in the article “Money creation in the modern economy” (in their 2014 Q1 Quarterly Bulletin), the vast majority of all money is created as debt by commercial banks making loans. In short, if the economy grows, that means more debt has been created. Reduce the amount of debt, and by definition there’s less money in the economy. Pay off all debt, and the economy will be left with no money in it. In this scenario, how much debt is too much debt?
No wonder ordinary people in the modern world feel like they are sprinting just to stand still.
So, a growing economy means more money, which is created by increasing the amount of debt.