From scarcity to abundance
At some point we may not need more products and services, and even if we believe we do, we may not be able to go deeper into debt to buy everything we desire. As a consequence businesses will find it more difficult to make a profit. This is why interest rates have gone down in recent decades and may go negative in the future.
A short introduction
In 1932, in the middle of the Great Depression, the Austrian town of Wörgl was in trouble and prepared to try anything. Of its population of 4,500, a total of 1,500 people were without a job, and 200 families were penniless. He came up with a solution. And soon a miracle occurred.
Why do we have money? What can money be used for? What makes money valuable? What types of money do exist? Most money we currently use is debt.
Banks turn debt into money. It is often said that banks create money. That is the magic trick banks perform. The trick isn’t complicated. It can be demonstrated using simple bookkeeping. There are things that can go wrong. That is where central banks step in.
How the financial system came to be
Once upon a time when gold was money, goldsmiths rented safe storage to other people because their vaults were well-guarded. The goldsmiths were also in the business of money lending. And so they came to lend out other people’s money. This was the beginning of modern banking.
The problem of interest
Suppose that Jesus’ mother had put a small gold coin of 3 grams in Jesus’ retirement account at 4% interest in the year 1 AD. Now suppose that the account was kept for his return. How much gold would there be in the account in 2017? It is an amount of gold weighing 11 million times the mass of the Earth. But there another, and much harder to solve, problem with interest.
Feasibility of Natural Money
Will Natural Money become the money of the future? And what are the consequences? The financial system could become stable, the economy could flourish, there could be more capital and wealth, the economy could be made sustainable and wealth could distributed more evenly. It could happen.