THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

the eleventh round - as part of the money creation process, and its
impact on the participants.
When the bank creates money by providing you with your Pound
100,000 mortgage loan, it creates only the principal when it credits
your account. However, it expects you to bring back Pound 200,000
over the next twenty years or so, if you don't, you will lose your
house. Your bank does not create the interest; it sends you out into
the world to battle against everyone else to bring back the second
Pound 100,000. Because all the other banks do exactly the same thing,
the system requires that some participants go bankrupt in order to
provide you with this Pound 100,000. To put it simply, when you pay
back interest on your loan, you are using up someone else's principal.
In other words, the device used to create the scarcity indispensable
for a bank-debt system to function involves having people compete
for the money that has not been created, and penalizes them with
bankruptcy whenever they do not succeed.
The interest rate decisions of central banks get our attention, and
this is one of the reasons. The additional cost of increased interest
results automatically in a proportional number of increased
bankruptcies in the near future. This takes us back to the time when
the high priests had to decide whether the gods would be satisfied
with the sacrifice of only a goat - or require the sacrifice of the firstborn
son instead. Lower down on the totem pole, when your bank
checks on your creditworthiness, it is really verifying whether you
are capable of competing and winning against the other players, i.e.,
managing to wrestle out of them something that was never created.
In summary, the current monetary system obliges us to incur debt
collectively, and to compete with others in the community, just to
obtain the means to perform exchanges between us. No wonder 'it is
a tough world out there', and that Darwin's observation of the