Posted 29th October 2011
Margrit Kennedy: Interest and Inflation Free Money (Published by Seva International; ISBN 0-9643025-0-0; Copyright 1995 by Margrit Kennedy)
The following extracts are useful in providing quantitative context for why a new interest free money system is needed and the existing monetary paradigm is unsustainable. The full paper proposes an alternative interest free monetary system. It describes what a new money system could look like and the benefits.
The numbers relate to Germany prior to 1995 when the paper was written. The inequality of wealth distribution and the interest burden/benefit is even greater today and particularly acute in the privatised Anglo Saxon economies.
First Misconception :
THERE IS ONLY ONE TYPE OF GROWTH
Figure 2 shows the time periods needed for our money to double at compound interest rates:
at 3%, 24 years;
at 6%, 12 years;
at 12%, 6 years.
Story: Persian emperor who was so enchanted with a new chess game that he wanted to fulfill any wish the inventor of the game had. This clever mathematician decided to ask for one seed of grain on the first square of the chess board doubling the amounts on each of the following squares. The emperor, at first happy about such modesty, was soon to discover that the total yield of his entire empire would not be sufficient to fulfill the “modest” wish. The amount needed on the 64th square of the chess board equals 440 times the yield of grain of the entire planet.
That is exponential growth!
The solution to the problems caused by present exponential growth is to create a money system which follows the natural growth curve. That requires the replacement of interest by another mechanism to keep money in circulation.