German picture of 1493 depicting human sacrifice by Jews

The Jewish Question

Experiment with tolerance

The Jews have lived as a minority in the lands of others for centuries, often separately in dedicated quarters as second-rate citizens. From time to time, they had to flee murderous mobs, and if fortune smiled upon them, they only lost their belongings. Because of their imagined special relationship with that supposed dude in the sky who created everything, the Jews have chosen not to integrate into their host societies and accept their religions, which, according to their scriptures, were heresies. And so, the Jews became a separate community, more loyal to each other than to others. As a result, Jewish existence became an experiment in diversity and tolerance, which had once flourished in the multicultural Roman Empire, as even the Gauls could keep their druids. Yet, it came under pressure with the rise of the uncompromising monotheistic religions, Christianity and Islam. It makes Jewish history a learning experience for the issues plaguing multicultural societies today.

The issue of what to do with the Jews became known as the Jewish Question. Several thinkers, including Martin Luther and Karl Marx, couldn’t resist the urge to express their views on the Jews, which generally were unfavourable. Voltaire, a European Enlightenment philosopher, wrote very nasty things about them. He was a smart fellow, so why would he? Is it just ill-informed hatred? And Adolf Hitler sought a definitive solution by exterminating the Jews, in what became the Holocaust. Being creative thinkers, the Jews also came up with a solution under the influence of nationalism: a country of their own. The myth of Zionism claims that an invisible dude floating in the sky had promised them a land, Israel. The founder of Zionism, Theodor Herzl, wrote, ‘The Jewish Question persists wherever Jews live in appreciable numbers. Wherever it does not exist, it is brought in together with Jewish immigrants. We are naturally drawn into those places where we are not persecuted, and our appearance there gives rise to persecution.’

Herzl never asked himself what role the Jews themselves played in the problem. That was the task of the anti-Semites. The Jewish Question has proved impossible to resolve over the past 2,000 years, despite the smartest minds working very hard on it. The same issues plague multicultural societies today, so we should take the problems arising from differing habits and beliefs very seriously. They cause harm. Jews did usury, and Christian did pogroms. As money is today’s religion, we learned that usury is good, but it is among the greatest evils. And we have trouble dealing with our differences. We are constantly scheming, and most of our communication is gossip. In folklore, conspiracy theories circulate blaming the Jews for all kinds of stuff, ranging from spreading diseases, sacrificing children in their rituals, and conspiring to dominate the world. This tradition continues into the present, partly because the facts make some of these conspiracy theories seem plausible. A few examples are:

  • Those who oppose the current financial system and don’t understand finance may blame the Jews for it, as the Jews have been moneylenders for centuries.
  • Zionist Jews have taken a slice of Arab land that is now Israel, so a lot of Arabs hate Jews. The fight gets exported to other places where Jews and Arabs live.
  • You may hear that Jews determine what you hear on the radio and see on television because they control the media. So, do they? Inquiring minds want to know.
  • Perhaps you have read that Jews cause wars and revolutions, sometimes with the help of the secretive Freemasons and the elusive Illuminati.
  • There is a worldwide trade in illegally harvested organs. Jews are also involved. It is not only Jews, but anti-Semites don’t care about the others.
  • Perhaps we can’t trust Jews because they are more loyal to Israel than the country they live in. But what about migrants from other countries?
  • The United States has a corrupt and dysfunctional political system. The Jews used it to their advantage. So, follow the money trail.
  • The same goes for poor-quality Hollywood movies. Those sneaky bastards spread LGBTQ+ propaganda to destroy traditional Christian families by making people gay.
  • We can blame the Jews for other things too, of course, not the ‘good Jews’, only the ‘evil Jews’, but it is hard to tell the difference. They are the perfect scapegoat.

These conspiracy theories are not entirely untrue. Denying or repressing the truth doesn’t help in the long run. The truth can set us free if we let go of hatred and resolve these issues. Otherwise, you can kiss progress goodbye, and the worst side of human nature will once again rear its ugly head as it did during the Holocaust. There is a relationship between ethnicity and conduct that goes via culture. Cultures emerge out of history and circumstances. You can’t blame someone for being raised in a particular tradition, but our traditions harm others when we live together. That is not only true for Jews. Just think of the damage whites have caused all over the globe. There is ethnicity-related organised crime, like the Italian mafia. In the United States, blacks do more violent crimes than other ethnic groups. Non-Western immigrants in Europe are also increasingly posing problems. So, if bigots allege that Jews do this or that, look at the facts. Maybe some of it is true.

There has been a longstanding Christian history of intolerance towards the Jews. Only, Christians were far more intolerant towards all other religions, including diverging versions of Christianity, which were heresies that had to be eradicated, until Protestants proved impossible to exterminate. Christians only tolerated the Jews, first because the Pope said so and later because they proved helpful for trade, tax collecting and moneylending, which Christians found morally reprehensible activities and didn’t wish to do themselves. Muslims were even more tolerant. Apart from Jews, they also tolerated Christians. Okay, they had to be submissive and pay special taxes to their Islamic overlords. Yet, despite all that tolerance, Christianity and Islam were the most intolerant religions. It proved crucial to their success. Today, Christians and Muslims together make up half the world’s population.

As a result of the spectacular success of their fairy tale collection, the Jews often found themselves in the crosshairs. Still, their plight was not much unlike that of other minorities that didn’t integrate into society. Humans strive for conformity and employ exclusion and violence to that end. And being beaten up is the least you can expect from peasants if you look peculiar, smell differently, and have strange ways. That is why Jews preferred to live in cities, where they mingled with others who wore extraordinary outfits and followed peculiar customs. It is human nature to be xenophobic, but we can get accustomed to differences. And you had to in cities. And you had to in cities. Otherwise, you would spend much of your time harassing strange-looking people, and get beaten up also, for there are more strange-looking people in the city than on the countryside.

Short primer on Jewish history

Reading the Bible might give you a wrong impression of Jewish history. It is a collection of myths mingled with facts. And it gives the Jewish perspective. A historian would present a very different narrative. Between 1200 BC and 900 BC, a few small nation-states emerged in Canaan, which is the area now covered by Israel and Palestine. Among them were Israel and Judah. These small states emerged because Egyptian power waned and the Egyptian vacated the area. In the Bible, you read that Moses led the Jews out of Egypt with the help of an intimidating cloud named God. There was a liberation from Egypt, but the Biblical account is greatly embellished. It took a few centuries for new, powerful states to emerge and overrun these small states. Israel fell into Assyrian hands in 720 BC. Judah was destroyed in 587 BC by the Babylonians, who had taken over the Assyrian Empire.

These small kingdoms had a national deity for fortune and protection. Their kings adopted a deity to promote a sense of a nation and to assert their authority. Yahweh was the deity of Judah and probably also of Israel. At first, Yahweh’s worship may not have differed much from the worship of other national deities, such as Chemosh, the god of Moab. When the Assyrians and Babylonians destroyed Israel and Judah, their inhabitants faced an identity crisis. The Babylonians took many Jews into exile in Babylonia while others remained. Jewish priests then compiled the Tanakh (Old Testament) from existing documents and circulating stories to define a sense of national identity around their deity, Yahweh, in the absence of a king or territory. In this way, the Jews became a people without a land. Their promised land, Israel, remained central to their religion.

Around 450 BC, the exiled Jews could return to Canaan. From 164 BC onwards, there was an independent Jewish state for 100 years until the Romans conquered it. At the time of Jesus, tensions were growing between the Jews and their Roman overlords. It led to uprisings between 66 AD and 136 AD. During these revolts, the Romans destroyed the Jewish temple. Over time, the majority of the area’s inhabitants became Christians and later Muslims. Jews remained in scattered communities around the Mediterranean. This is called the diaspora.

In ancient societies, only the elites received an education. The Jews introduced mass education for their people. Their scriptures became the pillar of their national education system. Divine knowledge, rules, and regulations became public. The value of education thus became embedded in Jewish culture. Nations came and went, but the Jews survived. Being a people without a land, and basing their identity entirely on religion and traditions, was a successful long-term survival strategy for the Jews. They have been around for more than 2,500 years, and without a homeland for nearly 2,000 of those years. It is also why not all Jews support the Zionist project of the state of Israel. A Jewish state might endanger the Jewish nation and identity if the Jews fail to defend their land.

The Jewish religion became the basis for Christianity and Islam, both of which regard Judaism as a legitimate religion, even though less advanced. Christians and Muslims allowed Jews to live in their lands, albeit as secondary citizens. In the Middle Ages, Jews built up a trade network in Europe and the Middle East. They had freedom and influence within Christian and Islamic lands. Jewish merchants had a chameleon-like ability to fit into spaces that were either ruled by Muslims or Christians. For centuries, the Jews faced few restrictions and held positions of power in Spain and Portugal. That changed later on, most notably after the Jews were expelled from Spain.1

Living together was not always easy. Christians have blamed the Jews for killing Jesus. The Jewish high priests had accused Jesus of blasphemy as he had claimed to be the Son of God. The Jews believed that God had no son, and calling yourself the Son of God in a literal sense, which Jesus did, was most blasphemous indeed. Jesus apparently did some magic to back up that claim. Yet, not everyone was convinced. According to the Gospel, the Jewish high priests and a Jewish mob demanded the crucifixion of Jesus. That supposedly made the Jews forever responsible for the death of Jesus. It was a justification for Christian anti-Semitism. The Gospel, which means good news, by the way, goes into the particulars as to why that is so (Matthew 27:24-25),

When Pilate saw that he was getting nowhere, but that instead an uproar was starting, he took water and washed his hands in front of the crowd. ‘I am innocent of this man’s blood,’ he said. ‘It is your responsibility!’ All the people answered, ‘His blood is on us and on our children!’

That was not good news for the Jews. And there was more bad news. From time to time, rumours spread that Jews abducted Christian boys for their secret rituals. It is known as the blood libel. When a boy had disappeared, it was an excellent occasion to murder some Jews. There was no basis for these beliefs, but few people knew about the Jewish religion and its practices, except that they wore funny suits and hats. And because of their ritual hygiene, the Black Death didn’t affect Jews as much as Christians. As a result, rumours spread that Jews spread the disease, leading to more evictions and murders.

Now look at the issue from the perspective of a medieval peasant. He didn’t know the cause of Black Death, for no one knew it was germs feasting on fleas feasting on rats, and Jews seemed not to catch the disease. Fearing they were behind it was rational. The information he had suggested that it might be true, and it was a matter of life and death, so it was better to be safe than sorry. Medieval people also burned witches at the stake when the harvest failed. If, due to a lack of knowledge, witchcraft seemed a cause of harvest failure, your survival might depend on burning witches. As Americans say, ‘Shoot first, ask questions later.’ That is how you survive. And if you wish to get rid of people you don’t like, and Jews were not well-liked, you can spread these rumours, and others will do the dirty work for you.

Some Jews had considerable influence, but as a group they had a low standing in popular culture. They worked in tax collecting, trade and finance, activities that were seen as reprehensible, as trade and finance often coincide with questionable ethics. Some languages have words or sayings that point to the issue. The English language has the term Jewish stock take, referring to a shopkeeper destroying his shop in a self-lit fire to claim insurance. The Dutch language has the word ‘jodenbod’, which means ‘Jew’s bid’, to indicate bids below a reasonable price that people in a desperate position might have to accept. And these stereotypes didn’t merely pop out of nowhere.

After the French Revolution of 1789, Jews in Western Europe received citizenship. In Eastern Europe, where they were somewhat less enlightened because they hadn’t fought hard enough over religious trivialities, and most notably in Russia, they continued to face pogroms, which were riots that included robbery, destruction of property and sometimes killings. Around 1870, the first Jewish settlers entered Palestine. In 1896, Theodor Herzl published The Jewish State, claiming that the solution to the Jewish Question was a Jewish state. It marked the beginning of modern Zionism.

In 1873, the Vienna stock market crashed. A lingering slump followed, lasting until 1896. It was the first global economic crisis, known as the Great Depression. Compounding the woes was the expansion of the railroad network, which opened European markets to cheap grain from the United States and Russia, leading to a collapse in agricultural prices and a wave of bankruptcies in the Great Agricultural Crisis. Land prices dropped. Also, my great-great-grandfather was duped. He was a farmer who had bought land before the slump. The price of land would not return to its old level during his lifetime. This story still circulated within my family, illustrating the severity of the hardship.

The repercussions are not to be underestimated. Anti-Semitism rose in Germany, Austria and France. People blamed Jewish bankers. The unsettling events also set investigative minds to work to uncover why they happened, as would happen again during the Great Depression of the 1930s. The epicentre of the crisis was Austria, which helped give rise to the Austrian School of Economics and its theories on credit cycles. Yet, the primary cause of financial crises is usury, or lending at interest. Many people saw usury as a scam, making them blame the banks and the Jews. It was also the time when Silvio Gesell lived. He experienced the misery first-hand as a German businessman. It prompted him to investigate the underlying causes and, later, to write The Natural Economic Order. That Hitler came from Austria is not merely an accident but also a cultural-historical phenomenon. As was the Miracle of Wörgl occurring there. German-speaking people were very much aware of usury and its consequences.

In France, anti-Semitism led to the conviction of Captain Alfred Dreyfus, the only Jewish member of the French general staff, of spying for Germany. He was innocent and was rehabilitated a decade later, following vigorous protests. During World War I, many Jews fought for their nation-states, also in Germany. Yet after the war, a myth emerged in Germany, suggesting Germany had lost the war because of leftists, anti-monarchists and a Jewish conspiracy. That was most ironic. The international Jewry was inclined towards Germany because it fought the Russian Empire, which had the most anti-Semitic government at the time. And it was Germany that helped spark the Bolshevik Revolution, seeking to undermine the Russian war effort by sending exiled radicals into the country and financing their activities. The Nazis later blamed the Jews for what Germany did.

Jewish state

As the international Jewish community mostly favoured the Germans during World War I, the British offered them Palestine to establish a national home for the Jews in a bid to get them on the Allied side. The Balfour Declaration was part of a letter from the United Kingdom’s Foreign Secretary Arthur Balfour to Lord Rothschild, a leader of the British Jewish community who came from a prominent banking family that was once among the richest and most powerful. In conspiracy theories, they still are, and control the fate of nations. Shortly after the start of World War I, a Zionist British Cabinet member, Herbert Samuel, wrote a memorandum proposing to back the Zionist cause to enlist the support of Jews in the war. The Arabs living in Palestine had no say in this matter, which soon led to tensions and Arab resistance, which the British repressed. Between 1920 and 1940, 300,000 Jews migrated to Palestine. The Arabs revolted between 1936 and 1939. The British subsequently restricted Jewish immigration.

After World War II, large numbers of Jews entered Palestine illegally, many of them Holocaust survivors. The Holocaust became a trauma in the collective memory of the Jews. Nearly six million of them died in concentration camps and mass executions. It gave credibility to the Zionists, who believed that the Jews could only be safe once they had a country of their own. The atrocities the Jews had suffered from raised support for the Zionist cause in the West, most notably in the United States, which favoured the illegal immigrants who soon caused mayhem and attacked the occupiers and the indigenous population. The Zionists’ guerrilla war against the British comprised 70 terrorist attacks between 1937 and 1948, including the King David Hotel bombing that killed 91 people and the devastating bomb attack on the British police headquarters in Haifa.

In 1947, the United Nations planned to divide Palestine between the Jews and the Arabs. The plan allotted 62% of the land to the Jewish state despite the Palestinian Arab population numbering twice the Jewish population. The Zionists accepted it as it was a favourable deal for them. The Arabs rejected it because, in addition to forming a two-thirds majority, they owned a majority of the land. The Arabs were also unwilling to accept a division and sought Arab rule over Palestine.

After Israel declared independence in 1948, a civil war broke out. The neighbouring Arab countries attacked Israel, but the Zionists were prepared and well-trained, and the Arabs lost. Around 700,000 Arab Palestinians, or 80% of the population, fled or were expelled from their homes. The Palestinians call it ‘The Catastrophe’. The Catastrophe greatly influenced Palestinian culture and helped to create the Palestinian identity. Before that, they were merely Arabs. The Catastrophe means displacement, dispossession, statelessness and fracturing of Palestinian society, much like the Jewish diaspora.

During the Six-Day War of 1967, Israel conquered the remaining Palestinian territories. Israel started this war after Egypt blocked Israeli shipping through the Egyptian-controlled Strait of Tiran and brought military forces close to the Israeli border. An Israeli surprise attack caught the Egyptian forces off-guard, causing Egypt to lose nearly all its military aeroplanes. Jordan and Syria came to Egypt’s aid but were also defeated. Whether this pre-emptive war prevented an Egyptian attack on Israel remains a matter of debate.

Israel captured and occupied the Golan Heights from Syria, the West Bank from Jordan, the Gaza Strip and the Sinai Peninsula from Egypt. Around 300,000 Palestinians and 100,000 Syrians fled or were expelled from the West Bank and the Golan Heights. The remainder came to live under Israeli occupation. Zionist settlers began colonising the remaining parts of Palestine, most notably the West Bank. In 1973, Egypt and Syria launched a surprise attack against Israel with the support of other Arab nations in the Yom Kippur War. After initial Arab successes, Israel repelled the attack.

Israel achieved peace with Egypt and Jordan, but the Israeli-Palestinian conflict remains unresolved. Palestinian resistance came in the form of terrorist attacks such as blowing up buses filled with civilians in a bid to kill as many Jews as possible. At the same time, Jewish settlers kept grabbing the land of the Palestinians, often with violence. And both believed they had God on their side, so that their cause was just, whatever evil they perpetrated. Since 7 October 2023, after a terrorist attack by Hamas that killed over 1,000 Israelis, the hope for peace seems gone. Hamas gets its arse kicked. The Palestinians have yet to learn the hard lesson the Jews learned 20 centuries ago when the Romans routed them. You don’t have God on your side when you fight a vastly superior opponent. And Israel is not a colony in the traditional sense, so the Jews will fight to the death for their homeland. Now, let’s hope that there will be peace in Israel and Palestine, and that future generations can leave this bitter conflict behind.

Conspiracy theories

Anti-Semitic conspiracy theories range from crazy allegations to assertions backed by well-documented research, like the investigation into the Israel lobby by John Mearsheimer and Stephen Walt. The stranglehold of Jewish interest groups is not a conspiracy theory, but a well-documented fact. There is a large grey area in between. It has long been a minefield because of the Holocaust and the wrath of the Israel Lobby. No sensible person would like to see pogroms, while few politicians opposing the Israel Lobby could stay in office. The Jews are a small group with an enormous clout and impact on world history. It fuels speculation. Is there a scheme behind it? Before going into that, there are a few general explanations for the remarkable successes of the Jews. These are:

  • Education. The Jews invented mass education twenty-five centuries ago (it took twenty-four centuries for Western Europe to follow suit).
  • Jews often went into occupations like trade and finance, which can make you wealthy and give you a position of power as you let others work for you.
  • For centuries, the Jews lived under marginal and uncertain conditions. It required resourcefulness that became part of Jewish culture.
  • The Jews are God’s chosen people. That was not always a blessing for the Jews themselves, nor did being chosen seem to be a blessing for Jesus.

Anti-Semitism has done tremendous harm as it led to the Holocaust. Yet, the anti-Semitic conspiracy theories aren’t entirely incorrect. When the CEO of the ADL, Jonathan Greenblatt, complained that the Christian identity movement is an anti-Semitic, racist, and poisonous ideology, he had a point. But then again, the Jewish lobby proved the point of the anti-Semites, as they have the MAGA politicians in their pocket, and even control the political branch of the Christian identity movement. That is how far things have gotten and why many people hate Jews, not only in the United States. A 2026 UNESCO report claims that three-quarters of European teachers have witnessed anti-Semitic incidents ranging from wearing Nazi symbols or Holocaust denial to physical violence.3 That also has to do with the migration of Muslims to Europe and the Israeli-Palestinian conflict.

Things are escalating. Jews aren’t safe in more and more places. So it is better to view these conspiracy theories more objectively as hypotheses that might be supported by evidence, while recognising that they are part of a wider problem of tribalism and cultural differences. That requires emotional distance, as the truth can be painful for those involved in these conflicts. Still, if we can manage that, we might get closer to their resolution.

An American joke goes like this: ‘Why does Israel not become a state of the United States? Well, if Israel does, it will have only two Senators.’ Israel has had the United States’ unconditional support for decades. Whatever Israel did, such as taking Palestinian land or attacking its Arab neighbours, it had US support. Senators and members of Congress who held different views faced the powerful Israel Lobby. The lobby would fund their opponents’ campaign, thereby ensuring their defeat. Campaign financing corrupts US politics, and the Jewish lobby is a major player in the corruption game. The survival of the Jewish state was at stake. A book claims there is a secret Jewish plot to gain world domination.

The Protocols of the Elders of Zion is a work of fiction made up by the Russian secret service’s Paris branch around 1900. The Russian regime was hostile towards Jews. In 1917, the communists toppled it, and there were many Jews in the communist movement. A few radicals taking over such a large country? It can’t be a coincidence. Indeed, Germany had a hand in it. Since then, more people began to take the Protocols seriously because humans are religious creatures who need myths to believe in. The Protocols claim the Jews form a secret cult conspiring to gain world dominance using all kinds of spectacular schemes hidden from the public eye. The absence of evidence proved the secrecy and brilliance of their planning. Adolf Hitler and the automaker Henry Ford believed it, as did many others. Yet, if you look at the world today, the work looks prophetic. That is the irony of history or God’s plan.

The main themes of the Protocols and related conspiracy theories are control of world finance, organisation of radical movements and interference with diplomacy to cause wars that kill non-Jews. There are racist, political and religious aspects to these claims. You can read ‘evil Jews’ between the lines. Anti-Semites use so-called whistle words such as ‘our overlords’ or ‘lizard people’. That was also because automated message board moderation tools were taking out negative comments mentioning the word Jews. Not everyone gets it, and humans are fairy-tale-believing creatures, so more and more people now think that reptilians run the world. Jewish advocacy groups pointed out the racism, bigotry and false claims. It didn’t help. The Protocols are a model of reality that offers a particular explanation for phenomena such as Jewish influence and involvement in finance. It seems to explain much, also because reality resembles the fiction.

The political scientists John J. Mearsheimer and Stephen M. Walt investigated the Israel Lobby’s activities and concluded that if you criticise Israel in the United States, you will be branded an anti-Semite, which means that you are a racist Jew-hater. Major newspapers subsequently published editorials calling their research anti-Semitic, thereby proving their point because they backed their claims with evidence. AIPAC is the most prominent organisation in the Israel Lobby. Mearsheimer and Walt concluded,

AIPAC’s success is due to its ability to reward legislators and congressional candidates who support its agenda, and to punish those who challenge it. AIPAC makes sure that its friends get strong financial support from the myriad pro-Israel PACs. Those seen as hostile to Israel, on the other hand, can be sure that AIPAC will direct campaign contributions to their political opponents. The bottom line is that AIPAC, which is a de facto agent for a foreign government, has a stranglehold on the U.S. Congress. Open debate about U.S. policy towards Israel does not occur there.2

Stranglehold is considered a whistle word as it implies that evil Jews run US politics, which supposedly is an anti-Semitic conspiracy theory. Still, it is a well-documented conclusion, for you can’t get far in US politics without the approval of the Israel Lobby. And so, the anti-Semitism argument increasingly fails to convince. It has long been forbidden to say the truth in the open, so that it festered below the surface. The same is true for other issues plaguing multicultural societies. These feelings are understandable, but the alternative is worse. Political correctness has sought to keep the troubles at bay, but in doing so, it hasn’t solved the underlying problem of our believing different myths, which puts us in conflict. A multicultural society may work if the state is strong and respected by everyone, and if we are all tolerant or believe the same myths. And it requires a fair social contract. These are fairy-tale-like conditions.

If you think of the consequences of anti-Semitism in the past or that millions of Jews face displacement if Israel collapses, it is understandable why Jewish interest groups go to great lengths to keep American support. Equally understandable is that many Palestinians hate the Jews so much that they want to kill them because they have taken their land. The Jews occupy their country. And so, the alternative to the myth of multiculturalism is tribal warfare, and the situation in Israel and Palestine perfectly illustrates that alternative. The only solution is a final solution. That is what Hamas and the Israeli government might agree on. It is only that, for multiculturalism to succeed, we must all identify as one people.

Suppressing the truth may work for a while, but it can become a self-defeating strategy if problems go unaddressed and escalate. People may get angrier and succumb to increasingly extreme fantasies. MAGA is a good example of the level of delusion people can reach. And the crazies aren’t entirely wrong. Millions of immigrants entered the United States unchecked, so half the Americans were willing to accept any lie to stop this. And think of the possibility that Epstein was a Mossad agent. It remains unproven but, given the evidence at hand, is a realistic possibility. Dealing with the truth is like opening a can of worms. The obsession with Jews that many have distracts from other lobbies operating in the corrupted US political system, some of them representing foreign national interests. Still, few lobbies attract as much attention as the Israel Lobby. So why is the Israel Lobby so powerful, visible and aggressive? There are some possible answers:

  • The Israel Lobby has long had broad popular support. Anti-Semitism led to the Holocaust, so the Israel Lobby could easily gain sympathy.
  • Jews feel insecure. The Holocaust is their collective trauma. Criticism of Israel provokes the fear that the legitimacy of the Jewish state is at stake.
  • Israel ignores international law by colonising Palestinian land. The unconditional support of the United States helps Israel to do that.
  • You can’t reason with fanatical opponents like Hamas, Hezbollah and Islamic Jihad who will not stop until either they or Israel has been fully annihilated.
  • And finally, the elites run the political system, and about half of the wealthiest Americans are Jewish, while Jews make up 2% of the population.

The Israel Lobby is the most visible in the United States but has significant clout elsewhere. The rationale for fighting anti-Semitism is the Holocaust. The Woke, also known as the Frankfurt School, copied these same tactics. In his book Critique of Pure Tolerance, Herbert Marcuse argued that freedom of speech limits freedom. He proposed a so-called liberating tolerance. It is intolerance of right-wing movements and tolerance of left-wing movements. To them, radical left-wing propaganda was acceptable while radical right-wing propaganda was not. The Frankfurt School originated in Germany and was obsessed with preventing the resurgence of Nazism, which explains its particular view of free speech. The group has had a significant influence, as it brought us political correctness, and it is more commonly known as cultural Marxism.

Trade and usury

The Jew as usurer is a well-known theme in anti-Semitic folklore. Jews traditionally often worked in trade and finance. In the Middle Ages, Jews were forbidden to perform honourable crafts or own land and were pushed further into activities Christians deemed reprehensible. The most successful merchants are the greedy ones. A most nefarious practice was money lending at interest, or making money without working for it. It creates a money shortage, leading to deflationary collapses in which usurers can buy up at fire-sale prices, thereby further enriching themselves at the expense of the poor. Merchants make money without working by making others work for them. Worse yet, they make people compete, which has led to an explosion in wealth but has also pushed humanity into an innovation death spiral that is now nearing its final phase.

The Roman Catholic Church forbade Christians to charge interest to fellow Christians. The Bible says, ‘You shall not charge interest on loans to your brother.’ (Deuteronomy 23:19) Christians and Jews didn’t see each other as brothers, so that Jews could lend money at interest to Christians. Jews never had a monopoly on trade and banking, and Christian bankers invented schemes to circumvent the anti-usury laws by relabelling interest as administrative fees, or they came up with other gimmicks, yet Jews being involved in these activities goes a long way in explaining the sentiments against them. Today, the long-term consequences of interest charges and trade are poorly understood, but they are the main drivers of the efficiency and innovation drive that drives our collective suicide.

It is not that the Jews didn’t know. Rabbis wrote commentaries on usury in their scriptures. One explains that interest works like a snake’s bite. Initially, it appears insignificant, but it will eventually take the person’s life. Interest eventually consumes the borrower, leaving him no way out of his ever-increasing debts. The lender appears to be increasing his wealth through interest. However, like cancer, interest eventually consumes him also. The economy will ultimately collapse due to wealth inequality, with borrowers unable to repay their debts. Modern finance, despite its seeming advanced, is merely an extend-and-pretend fantasy to keep the Ponzi scheme of usury going. And it has worked so far because economic growth and inflation helped to keep the debt load manageable.

Interest is most vicious but largely imperceptible, as it works over the long term across several human lifespans, so once you have seen the truth, you are among the few and already on your way to the grave. At the same time, the next generation of uninformed suckers swarm the streets. The accumulation of capital into the hands of a few brings down individuals, businesses, nations, and ultimately, entire civilisations. In the Middle Ages, everyone knew that usury was evil. Interest rates were high, sometimes as much as 20% to 30% annually. The misery it caused was plain for everyone to see. Yet, for lenders, the risks were also high, so at 10% interest, their business would have been loss-making. These rates were a ‘fair’ market price, yet a societal curse. Persecuting Jews was also profitable for their debtors. In 1290, King Edward I expelled the Jews from England, confiscated their assets, and defaulted on the loans he had received from them.

Large-scale borrowing can’t occur without debt markets and interest. There would have been no capitalism without interest on debts. In the 16th century, interest rates fell to around 10% annually as financial markets became more developed and efficient, thereby reducing lending risk. As interest rates fell and because of the Protestant Reformation, religious objections to interest waned. Interest became an essential part of the capitalist economy, and Western culture largely remained ignorant of the problematic nature of interest charges. Once Christians could charge interest on fellow Christians, the Jewish role in money lending reduced, but it remained significant, and it affected Jewish culture. In his work On the Jewish Question, Karl Marx wrote,

Let us not look for the secret of the Jew in his religion, but let us look for the secret of his religion in the real Jew. What is the secular basis of Judaism? Practical need, self-interest. What is the worldly religion of the Jew? Huckstering. What is his worldly God? Money. […] The Jew has emancipated himself in a Jewish manner, not only because he has acquired financial power, but also because, through him and also apart from him, money has become a world power and the practical Jewish spirit has become the practical spirit of the Christian nations. […] Money is the jealous god of Israel, in face of which no other god may exist. Money degrades all the gods of man – and turns them into commodities[…] The bill of exchange is the real god of the Jew. His god is only an illusory bill of exchange[…] The chimerical nationality of the Jew is the nationality of the merchant, of the man of money in general.4

Several commentators have rushed to denounce the work as a classic example of anti-Semitic propaganda. And the anti-Semites, who see Marxism as a Jewish conspiracy, pretend it doesn’t exist. Karl Marx came from a non-religious Jewish family that had adopted Protestant Christianity. It gave Marx an inside view of the ways of non-religious Jews. And he didn’t base his observation merely on personal experience. He cited the work of others who investigated the matter when it was not politically incorrect to do so. He quotes Bruno Bauer, who has also shared his thoughts on the Jewish Question,

The Jew, who in Vienna, for example, is only tolerated, determines the fate of the whole Empire by his financial power. The Jew, who may have no rights in the smallest German state, decides the fate of Europe. While corporations and guilds refuse to admit Jews, or have not yet adopted a favourable attitude towards them, the audacity of industry mocks at the obstinacy of the material institutions.

So, when the Vienna stock market collapsed, many blamed the Jews. Marx’s language feels rather disagreeable in this post-Holocaust world, as he speaks of ‘the Jew’. Had he instead spoken of ‘the German’, no one today would have minded. And if you read carefully, it is admiration rather than hatred. Marx intended his writing as cultural criticism, so that everyone, Jews and Christians alike, could benefit. Marx argued that the money religion corrupts us. The Jews have to deal with their cultural heritage, which also affects Christians, as ’emancipation from huckstering and money, consequently from practical, real Judaism, would be the self-emancipation of our time.’

Silvio Gesell, who came up with the holding fee on money, became a fierce opponent of Nazism and condemned scapegoating the Jews. Gesell believed that hatred would divert attention from genuine economic issues, which he sought to address through land reform and a holding fee on money. Yet, in his work The Natural Economic Order, Gesell uses the phrase ‘Jewish stockbrokers with the keen intellects of their race’ and calls the Jewish pawnbroker ‘the money usurer’ as opposed to the German landowner who was the ‘land usurer.’5 So, an intelligent man with business experience, who opposed blaming Jews, nonetheless used the stereotype because it reflected reality.

Jews still play a prominent role in the financial sector in the United States. Several heads of the Federal Reserve, Alan Greenspan, Ben Bernanke, and Janet Yellen, were Jewish. Financial services made about 25% of corporate profits between 2000 and 2020. Bribes, dubbed campaign financing, play a central role in US politics and ensure favourable regulations for the financial industry. Receiving 25% of the money made in the economy without producing anything and bribing politicians to secure favourable regulations demonstrate the parasitism in finance. Ordinary people struggle to make ends meet, but the top 1% is doing well. Nearly half of the richest Americans are Jewish, despite them making up 2% of the US population. It is not an accident. After the Soviet Union collapsed, there was a scramble for the state’s assets. Many of the oligarchs who came out on top in that dubious process were also Jewish.

Media and public opinion

In 2012, six corporations owned 90% of the mainstream media in the United States. Most had Jewish CEOs and owners. Journalists are also often Jewish. How much that affects their reporting remains to be seen. In 2008, Philip Weiss remarked that in a few months, several serious people suggested that Jews predominate in the American media. For instance, at a forum at the Nixon Center, the former high-ranking government official Dov Zackheim said, ‘Jews don’t dominate the policy-making process, but the media is a different story.’ Based on his personal experience, Weiss claimed that most newspaper editors were Jewish.6

Does it matter? Weiss thinks so if the reporting concerns the Israeli-Palestinian conflict. He cites a few Jewish journalists who admitted to having a bias.6 Yet, J.J. Goldberg wrote in The Forward that, although Jews hold many prominent positions in the US media, they do not prioritise Jewish concerns and that Jewish Americans generally perceive the media as anti-Israel.7 During the Gaza War, the New York Times instructed its journalists covering Israel’s war on Gaza to limit the use of terms like ‘genocide’ or ‘refugee camp’ and avoid using the phrase ‘occupied territory’ when referring to the West Bank.8 The New York Times also featured an article about how extremist settlers took over Israel.9 So, whether the New York Times is biased is a matter of debate, but it is not uncritical of Israel, and also honest journalists can have biases.

And what about Jews dominating Hollywood, which is another Jewish stereotype? Joel Stein of the Los Angeles Times mocked the efforts of the Anti-Defamation League (ADL), which is another part of the Israel Lobby, to re-educate the American public:

I have never been so upset by a poll in my life. Only 22% of Americans now believe ‘the movie and television industries are pretty much run by Jews,’ down from nearly 50% in 1965. The Anti-Defamation League, which released the poll results last month, sees in these numbers a victory against stereotyping. Actually, it just shows how dumb America has gotten. Jews totally run Hollywood.10

Anti-Israel messages on the Internet proved more difficult to handle, as political correctness has given way to rudeness in a bid to safeguard the freedom of opinion. Israel has countered the issue by paying students for posting pro-Israel messages on social media.11 It was part of a public relations effort named ‘hasbara’ that some call propaganda.

The Israel lobby further tried to steer the academic debates. In 2007, about 300 academics called for academic freedom from political pressure, most notably from groups portraying themselves as defenders of Israel. In 2009, sociology professor William Robinson sent an email to students in which he compared the Israeli occupation of Gaza with the Nazi-controlled Warsaw Ghetto during World War II. The ADL then campaigned to discipline him for violating the faculty code of conduct, so the academic variant of a spanking.

Linguistics professor Noam Chomsky, a left-wing political activist who is highly critical of US and Israeli policies, claimed that the ADL had a 150-page dossier on him. Chomsky had defended the right to deny the Holocaust as freedom of speech. The ADL called him a Holocaust denier, describing him as ‘a dupe of overweening intellectual pride who is incapable of distinguishing between totalitarian and democratic societies and between oppressors and victims.’ The ADL collected information to use against him. Chomsky said an ADL insider sent him a copy of the file. It included conversations, correspondence and other materials. Chomsky added it read like an FBI file. He further noted,

It’s hard to nail this down in a court of law, but it’s clear they essentially have spies in classrooms who take notes and send them to the ADL and other organisations. The groups then compile dossiers they can use to condemn, attack or remove faculty members. They’re like J. Edgar Hoover’s files. It’s kind of gutter stuff.12

It was not an isolated incident, as Jews seemed to have established an intelligence and surveillance network in the United States. In 1993, the police department raided the San Francisco ADL’s Northern California office. It kept files on more than 600 predominantly leftist civic organisations and over 10,000 individuals. The police estimated the ADL had illegally obtained 75% of that information. The police investigation uncovered information about the ADL’s spying operations.13 The ADL went after Americans who oppose Israel’s oppression of Palestinians.14 District Attorney Arlo Smith dropped the case. It was not the only intelligence operation of a regional ADL branch.

For much of its history, the ADL has operated as a foreign intelligence organisation in the United States. The organisation’s spymaster, Irwin Suall, ran a nationwide network of agents and informants from the ADL’s New York City headquarters. Suall employed covert operatives in the field. One was Roy Bullock, who ran the operation in Northern California. According to a secret 1993 FBI memorandum, the San Francisco Police Department received information from a reliable source that two Israeli generals were about to travel to Washington, DC, to press for an end to the FBI’s investigations.

Wars and revolutions

During the French Revolution, the revolutionaries decided that Catholics, Protestants and Jews would all become full members of society. In 1797 and 1798, a French Jesuit and a Scottish physicist published two remarkably similar books claiming secret societies were undermining the social order and had started the French Revolution. Both named the Freemasons and the Illuminati as the main culprits. The Freemasons promoted a secular state, thus a separation of Church and State. Some of their members played prominent roles in the American and French Revolutions. Jews also came into the crosshairs as they benefited. It marked the beginning of the conspiracy theories as we know them today. Much of contemporary conspiracy thinking still centres around secretive groups and Jews.

Another conspiracy theory is that the Jews started the 1917 Russian Communist Revolution. Anti-communists brought that up during the ensuing civil war to exploit existing anti-Jewish sentiments. There indeed were a significant number of Jewish Communist Party leaders during the revolution. The anti-Semitism of the imperial Russian government may have induced them to join radical political movements. Yet, it doesn’t explain why so many Jews joined radical movements in other countries. Milton Friedman found that Jews wrote a significant part of the revolutionary anti-capitalist literature and disproportionately filled the ranks of communist parties in several countries.15 And anti-Semitism did not disappear in the Soviet Union. In 1948, Stalin started a campaign against the so-called rootless cosmopolitans, a whistle word for Jewish intellectuals.

Friedman gave two reasons as to why that might be so. First, the left promised Jews equal citizenship, while the Christian right did not. Second, the stereotype of Jews being profiteers and usurers persuaded them to show themselves and others that they are not selfish and heartless but public-spirited and idealistic.11 A third reason, which Friedman didn’t mention, was that many intellectuals were Jewish, causing them to make an outsized contribution to both socialist and capitalist thinking. For conspiracy theorists, it was proof that the Jews control both sides, thus the capitalists as well as the communists.

From 1968 onwards, the left in the West gradually alienated itself from its traditional worker base in favour of disadvantaged groups like ethnic minorities, women, and LGBTQ people. The Marxist Frankfurt School played a significant role in this development. The Cultural Marxism conspiracy theory alleges that the Marxists of the Frankfurt School undermine Western civilisation with civil rights movements, feminism, multiculturalism, and LGBTQ propaganda, causing a breakdown of traditional Christian values. Several prominent thinkers of the Frankfurt School were Jewish, so some stress that fact to illustrate the Jews who are behind the so-called destruction of Christianity rather than the spread of rational thinking.

From 1968 onwards, the left in the West gradually alienated itself from its traditional worker base in favour of disadvantaged groups like ethnic minorities, women, and LGBTQ people. The Marxist Frankfurt School played a central role in this. The Cultural Marxism conspiracy theory alleges that the Marxists of the Frankfurt School undermine Western civilisation with civil rights movements, feminism, multiculturalism, and LGBTQ propaganda, causing a breakdown of traditional Christian values. Several prominent thinkers of the Frankfurt School were Jewish. That led some to believe that the Jews are behind the increase in atheism and more people turning queer.

Several wars are, to a significant extent, the outcome of neoconservative ideology, built on Samuel Huntington’s The Clash of Civilisations. Huntington wrote that Western nations would lose their dominance if they failed to recognise the irreconcilable nature of cultural tensions. Huntington claimed that Islam posed a fundamental problem to the West.16 He argued that the West should adapt to a new era where it is no longer dominant. The neoconservatives viewed it differently. Leo Strauss, who was Jewish and the founder of American neoconservatism, proposed a restoration of the vital ideas underpinning Western civilisation, such as classical Greek philosophy and the Judaeo-Christian heritage, and promoted faith in the West’s moral purpose.

They were conservatives who believed in the Hegelian dialectic and hoped to bring about progress through war and revolution, which places them in the tradition of the Bolsheviks and Lenin, who overthrew the Russian government. It is a reason why the neoconservatives pressed for war to bring liberal democracy to Iraq. The underlying problem was the unresolved Hegelian dialectical conflict between the West and Islam, and they reasoned that Western values are superior, and that the Iraqis would accept them. Several neoconservatives were Jewish, which promoted speculation that Israel’s security was their main concern. That might be so, but the efforts of the non-Jewish Vice-President Dick Cheney, a political asset of the oil industry, were more decisive.

Allegiance

Jewish loyalty is another issue that attracts attention. Every minority in a foreign country faces the question of allegiance. It isn’t a big issue when the minority and the host country don’t have a conflict of interest, or when the minority has little influence. Jews have significant clout in the United States and elsewhere. In his book By Way of Deception, Victor Ostrovsky, a former operative for the Israeli intelligence service Mossad, claimed that this service recruits helpers among the Jews outside Israel for its operations.17 Other secret services also enlist compatriots for espionage abroad, so it is not a particularly Jewish thing to do, but the Mossad is legendary for its daring operations on foreign soil. Yet, Russia and Iran have engaged in similar activities like murdering opponents abroad.

One of the most well-known ‘helpers’ was Jonathan Pollard. As a young Navy intelligence analyst, he claimed that the United States withheld information from its close ally, Israel. And so, he took it upon himself to correct this injustice, at a profit to compensate for the inconvenience that comes with treason. He sold classified US documents to Israel. Sensitive documents stolen by Pollard ended up in the hands of the Soviet Union, putting the lives of US intelligence assets at risk. A few other cases of Israeli espionage in the United States came to public knowledge, such as the arrests of former AIPAC officials Steve Rosen and Keith Weissman.

A noteworthy incident is the Israeli attack on the spy ship USS Liberty during the 1967 Six-Day War, which killed 34 Americans and wounded 170. The assault consisted of an air attack followed by a sea attack with gunboats. The official story is that Israeli forces mistakenly identified it as an enemy vessel. US Ambassador to Lebanon, Dwight Porter, recounted a conversation between an Israeli pilot and the Israel Air Force war room picked up by an NSA aircraft and inadvertently cabled to CIA offices around the world, which gives a different narrative:

Israeli pilot to war room: This is an American ship. Do you still want us to attack?
War room to Israeli pilot: Yes, follow orders.
Israeli pilot to war room: But sir, it’s an American ship – I can see the flag!
War room to Israeli pilot: Never mind; hit it.

Earlier that day, Israeli reconnaissance planes had already identified the ship as an NSA intelligence vessel. The presumed exchange between the pilot and the war room raises questions. What reasons could the Israelis have had? Why would they risk angering their ally, the United States? The journalist Peter Hounam claimed that President Johnson, fearing he would lose the election, sought a pretext to let the United States join the war on the Israeli side and had asked the Israelis to stage a false flag attack. That would also have been in Israel’s interest. It makes sense, but there is no proof that this is the truth.

The highly intriguing coincidences surrounding the terrorist attacks of 11 September 2001 have kept conspiracy theorists on edge. They were indeed of the kind that only a vast plot could accomplish. One that has received special attention is that a New York housewife had spotted five Israelis filming the attacks on the World Trade Center from a rooftop just after the first strike had hit the Twin Towers. The Israelis appeared full of joy. The police arrested them with $4700 in cash, foreign passports and a pair of box cutters of the type used by the hijackers. Two were Mossad agents. The FBI claimed they believed they were spying on Islamic extremist networks.18

Well, were they? The FBI interrogated them for weeks and concluded that there was no evidence they had foreknowledge of the attacks. But the Israelis were uncooperative, so it was impossible to extract much information from them. Later, some of them discussed the events on an Israeli talk show. One said, ‘We come from a country that experiences terror daily. Our purpose was to document the event.’18 The evidence suggests the Israelis knew more, likely some specifics of the attack plan. An Israeli official told the Associated Press, ‘Everybody knew about a heightened alert and knew that bin Laden was preparing a big attack.’ He said the Israelis had passed on this information to Washington and denied Israel had concrete intelligence that could have prevented the attacks.19

The Mossad is known for its daring operations. In the aftermath of the Hamas terrorist attacks of 7 October 2023, Israel scored some remarkable successes against Hezbollah and Iran with the help of its secret services. Mossad agents had duped Hezbollah into buying thousands of explosive pagers and walkie-talkies. When Israel attacked Iran in 2025, it killed senior commanders and nuclear scientists and disarmed Iran’s air defences. Commando forces operated in Tehran and across the country, while Iran’s security and intelligence agencies remained unaware. Mossad teams targeted air defence missiles, ballistic missiles, and missile launchers. Israel had already assassinated several Iranian nuclear scientists and acquired Iranian nuclear information.20

Influence on the United States government

An evangelical Christian desire to return the Jews to the Holy Land has promoted the Zionist cause in the United States, as they believe it to be a prerequisite for the Second Coming of Jesus. Consequently, there is strong support for Israel amongst Evangelical Christians and Republicans. Jewish Americans often back Democratic candidates, so Democrats pay close attention to their Jewish voters. This ensured support for Israel in both political parties. US politicians need donations to fund their campaigns, making them open to bribes by corporations and wealthy individuals. Jews generously donate to political campaigns. In 2006, 60% of the Democratic Party’s fundraising and 25% of the Republican Party’s fundraising came from Jewish-funded Political Action Committees.

Several Jewish Americans achieved influential positions in the United States government. Some were also Israeli citizens. In 1994, the Israeli paper Ma’ariv wrote that the Clinton Administration had allowed more Jews in sensitive positions than any government before. The article noted their achievements had brought them there. The Jewish component of the Democratic government was significant, but there were also Jews heading for top positions in the Republican Party, for example, Paul Wolfowitz.21

Wolfowitz was one of the neoconservatives, a political movement whose ideology played a significant role in American policies after 11 September 2001. In 2000, he was one of the supporters of the Project for the New American Century (PNAC), which promoted the removal of Saddam Hussein. After 11 September 2001, the PNAC pushed for an attack on Iraq. The security of Israel played a role in the considerations of the neoconservatives, but there is little evidence that protecting Israel was a principal reason for starting the Iraq war.

Mearsheimer and Walt wrote that pro-Israel figures have established a commanding presence at the American Enterprise Institute, the Center for Security Policy, the Foreign Policy Research Institute, the Heritage Foundation, the Hudson Institute, the Institute for Foreign Policy Analysis, and the Jewish Institute for National Security Affairs and that these think tanks are all decidedly pro-Israel.2

In most cases, the US supported the position of Israel, but there are a few instances in which the US government did not. The Eisenhower administration forced Israel to withdraw from the Sinai after the Suez Crisis. The administration of Bush Sr. delayed support to Israel because of the settlements in the Palestinian territories. The Israeli government and the Obama administration differed on the settlement issue and how to deal with Iran, and the Israel Lobby organised resistance against the US government. Still, the degree to which US administrations have done Israel’s bidding is remarkable. US Representative Thomas Massie revealed that every Republican in Congress has an AIPAC babysitter. The money of the Israel Lobby helped to end his political career in the most overspent GOP primary campaign ever.

Irony of history

The Jews are well-organised. The situation as it is today makes even the most bizarre conspiracy theories as laid out in the Protocols of the Elders of Zion appear convincing. Had these Protocols been for real, the situation today may not have been much different. And so, Manny Friedman wrote in the Times of Israel,

We have, for example, AIPAC, which was essentially constructed just to drive agenda in Washington DC. And it succeeds admirably. And we brag about it. Again, it’s just what we do. But the funny part is when any anti-Semite or anti-Israel person starts to spout stuff like, ‘The Jews control the media!’ and ‘The Jews control Washington!’ Suddenly we’re up in arms. We create huge campaigns to take these people down. We do what we can to put them out of work.22

The Jewish lobby organisation AIPAC drives the agenda in Washington DC, the guy wrote. They take down their political opponents. Massie was just one in a long list. He goes on,

And let’s not forget AIPAC, every anti-Semite’s favourite punching bag. We’re talking an organisation that’s practically the equivalent of the Elders of Zion. I’ll never forget when I was involved in Israeli advocacy in college and being at one of the many AIPAC conventions. A man literally stood in front of us and told us that their whole goal was to only work with top-50 school graduate students because they would eventually be the people making changes in the government.22

He wrote that AIPAC is the equivalent of the Elders of Zion, because its operations resemble those described in the Protocols. Fact checkers have a hard time explaining that the Protocols are a fantasy when the facts, so how Jews operate, suggest otherwise. The Protocols were likely drawn up using existing stereotypes. As stereotypes are often grounded in reality, this outcome is less surprising than it might seem at first glance. Then Friedman draws the following conclusion,

The truth is, the anti-Semites got it right. We Jews have something planted in each one of us that makes us completely different from every group in the world. We’re talking about a group of people that just got put in death camps, endured pogroms, their whole families decimated. And then they came to America, the one place that ever really let them have as much power as they wanted, and suddenly they’re taking over. Please don’t tell me that any other group in the world has ever done that. Only the Jews. And we’ve done it before. That’s why the Jews were enslaved in Egypt. We were too successful. Go look at the Torah — it’s right there. And we did it in Germany too.22

In other words, Adolf Hitler was right when he feared that the Jews would take over Germany, and Henry Ford wasn’t crazy either. It is only that hatred isn’t the solution. Some German Jews had amassed fortunes. Otherwise, the Nazis couldn’t have robbed them of all these precious artworks. After the collapse of the Soviet Union, a group of oligarchs grabbed much of Russia’s wealth. About 25% of the Russian oligarchs are Jewish, while Jews make up 1% of the Russian population. It is a pattern. Friedman could say it because he is a Jew. But if you are not, you will be branded an anti-Semite.

In other words, Adolf Hitler had good grounds to fear that the Jews would take over Germany, and Henry Ford wasn’t crazy either. It is only that hatred isn’t the solution. Some German Jews had amassed fortunes. Otherwise, the Nazis couldn’t have robbed them of all these precious artworks. After the collapse of the Soviet Union, a group of oligarchs grabbed much of Russia’s wealth. About 25% of the Russian oligarchs are Jewish, while Jews make up 1% of the Russian population. It is a pattern. Friedman could say it because he is a Jew. But if you are not, you will be branded an anti-Semite.

Whenever the upper class of society coincides with an ethnic minority, trouble is brewing. Hatred among the general population might manifest as racism. In the past, the Jews often lived at the margin and had to be resourceful to survive. These skills became part of Jewish culture, so Jews often came out on top when no one stopped them. And due to trade and usury, wealth concentrated in the hands of a few, and traders and usurers were often Jewish. It is an example of cultural differences causing harm. White nationalists have appropriated the discussion, so it has become a poisoned debate, for the problem of multiculturalism includes white culture as well. Anti-Semitism and its causes are an example of behavioural differences between cultural groups causing trouble. Culture is key to the solution. And the basis of our cultures is the fairy tales we believe in.

Latest revision: 25 October 2026

Featured image: German picture of 1493 depicting human sacrifice by Jews.

1. Jewish Merchants in the Age of the Crusades. Alexandra Bramsen (2019).
2. The Israel Lobby and U.S. Foreign Policy. John J. Mearsheimer and Stephen M. Walt (2006). London Review of Books.
3. UNESCO survey finds antisemitism present in three quarters of EU classrooms. UNESCO (2026).
4. On the Jewish Question. Karl Marx (1844).
5. The Natural Economic Order. Silvio Gesell (1918).
6. Do Jews Dominate in American Media? And So What If We Do? Philip Weiss (2008). Mondoweiss.net. [link]
7. Jewish power: inside the American Jewish establishment. Goldberg J.J. (1997). Basic Books. pp. 280–281.
8. Leaked NYT Gaza memo tells journalists to avoid words ‘genocide,’ ‘ethnic cleansing,’ and ‘occupied territory.’ Jeremy Scahill, Ryan Grim. The Intercept (2024).
9. The Unpunished: How Extremists Took Over Israel. Ronen Bergman and Mark Mazzetti (2024). New York Times.
10. Who runs Hollywood? C’mon. Joel Stein (2008). Los Angeles Times. [link]
11. Israel to pay students to defend it online. USA Today (2013). [link]
12. Israel lobby descends on UC Santa Barbara. Committee To Defend Academic Freedom at UCSB. [link]
13. ADL Spies. Jeffrey Blankfort (2013). Counterpunch.
14. The Anti-Defamation League: Israel’s Attack Dog in the US. James Bamford (2024). The Nation.
15. Capitalism and the Jews. Milton Friedman (1988). Foundation For Economic Education. [link]
16. The Clash of Civilisations. Samuel P. Huntington (1996). Simon & Schuster.
17. By Way of Deception: The Making and Unmaking of a Mossad Officer. Victor Ostrovsky (1990). St. Martin’s Press.
18. Five Israelis were seen filming as jetliners ploughed into the Twin Towers on September 11, 2001. The Scotland Herald (2003). [link]
19. Context of ‘August 23, 2001: Mossad Reportedly Gives CIA List of Terrorist Living in US; at Least Four 9/11 Hijackers Named’. Cooperativeresearch.org.
20. Israel’s unprecedented attack shows Iran has become a ‘playground’ for the Mossad. Tamar Michaelis, Oren Liebermann and Jeremy Diamond (2025). CNN.
21. The Jews Who Run Clinton’s Court. Avinoam Bar-Yosef (1994). Maariv.
22. Jews DO control the media. Manny Friedman (2012). Times of Israel. [link]

Graffiti near the Renfe station of Vitoria-Gasteiz

The monster called financial system

Is the financial sector overtaking the real economy?

Less than 1% of foreign exchange transactions are made for trading goods and services. More than 80% are made for exchange rate speculation. Every three days an entire year’s worth of the European Union’s GDP of € 13 trillion is traded in the foreign exchange markets.1 So is the financial sector overtaking the real economy?

Financial industry share of total nonfarm business profits. Evan Soltas (2013)
Financial industry share of total non-farm business profits. Evan Soltas (2013). Economics and Thought.

In the United States financial sector profits grew from 10% of total non-farm business profits in 1947 to 50% in 2010.2 This figure excludes bonuses. It is explosive stuff and the original research has been removed from the Internet. The findings could give us the impression that the financial sector is a big fat parasite that feeds on us. And who would have guessed that?

What a scary monster the financial system has become. This terrible creature could easily wipe out human civilisation as we know it. That nearly happened in 2008. And it can still happen. We are hostage of this monster. It is too big to fail. But what created it? It wasn’t Frankenstein for sure. The answer is already out there for thousands of years. It is interest on money and loans. In the past this was called usury and often forbidden.

The core problem is that incomes fluctuate while interest payments are fixed. This causes instability in the financial system. And if the investment is more risky, lenders demand a higher interest rate, which contributes to the risk. Limiting interest would reduce leverage and make financial system more stable and less prone to crisis.

It’s the usury, stupid!

Fraud in the financial sector contributed to the financial crisis of 2008. To what extent the fraud or the size of the financial sector are to blame is less clear. Financial crises are not a recent phenomenon. They have caused economic crises in the past. For instance, the stock market crash of 1929 and the subsequent bank failures caused the Great Depression of the 1930s. Back then the financial sector was not as large as it is today and there was no large-scale mortgage fraud. Hence, there must be another cause.

Charging fixed interest rates on debts causes problems as incomes fluctuate. So if some person’s income or some corporation’s profit suddenly drops, interest payments may not be met. When the economy slows down that happens to a lot of people and corporations simultaneously, which makes the financial system prone to crisis. And interest is a reward for risk. Creditors may be willing to lend money to people and corporations that are already deeply in debt, but only if they receive a higher interest rate. So if interest was forbidden, that might not happen, and there could be fewer financial crises.

Banning interest has been tried in the past and it failed time after time. That is because without interest lending and borrowing wouldn’t be possible and the economy would come to a standstill. Until now there was a shortage of money and capital so interest rates needed to be positive, but that may be about to change. The increased availability of money and capital pushed interest rates lower. Money and capital may soon be so abundant that interest rates can go negative. That could be the end of usury.

The scary monsters in the financial system

Apart from exchange rate speculation there are frightening creatures like quantitative easing, shadow banks and derivatives. These things will be explained later in this post. Some experts believe that the financial sector is out of control. That may not be the case. Usury created this monster so Natural Money, which is negative interest rates and a maximum interest rate of zero, could make many of these seemingly hard-to-solve issues disappear, and perhaps shrink financial sector profits too.

Leverage, shadow banking and derivatives make the financial sector so profitable for its operators because of interest and risk. Interest is a reward for risk but interest also increases risk because interest charges are fixed while incomes aren’t. But more risk means more profit for the usurers because all that risk needs to be ‘managed’. That provides opportunities to profit for those who make the deals. Usury is the main cause of financial crises and generates most financial sector profits.

Quantitative easing

Quantitative easing means that central banks print money to buy debt with this newly created money. Trillions of dollars and euros have been printed so central banks now own trillions in debt. In this way the financial crisis of 2008 was stemmed. Investors and banks wanted to get rid of debts and preferred cash because there was a risk that some of these debts would not be repaid in full. This caused the crisis.

But what if there was a tax of 10% per year on cash and central bank deposits? Losing a few percent on bad debts suddenly doesn’t seem such a bad deal any more. Investors may have kept these debts and the crisis would not have occurred. The losses on bad mortgages turned out to be a lot less than 10% per year. That was also because the crisis was halted with central bank actions like quantitative easing.

If there had been a tax on cash and central bank deposits there would always have been liquidity. The crisis may never have happened in the first place and quantitative easing may not have been needed. And if this tax is going to be implemented in the future, investors may gladly gobble up the debt on the balance sheets of central banks, so that quantitative easing can be undone, and most likely at a profit for the taxpayer.

Shadow banks

In order to protect depositors, banks are subject to regulations. Regulations are bad for profits because they limit the risks banks can take. Bankers who were looking for bigger bonuses came up with a scheme that is now called shadow banks. Shadow banks don’t offer deposit accounts to ordinary people so regulations don’t apply. And so shadow banks can take more risk and generate more profits.

A shadow bank borrows money from investors and invests it in products like mortgage-backed securities. A mortgage-backed security is a derivative that looks like a bunch of mortgages. The owner of the security doesn’t own the mortgages themselves, but is entitled to the interest from the mortgages but also the losses when home owners fall behind on their payments. Not owning the mortgages themselves makes trading a lot easier because mortgages involve a lot of paperwork.

Shadow banks can be dangerous because bank regulations don’t apply. Ordinary banks are required to have a certain amount of capital to cushion losses so that depositors can be paid out in full when some loans aren’t repaid. The balance sheet of an ordinary bank might look like the one below:

debit
credit
mortgages and loans
€ 70,000,000
deposits
€ 60,000,000
loans to other banks
€ 10,000,000
deposits from other banks
€ 20,000,000
cash, central bank deposits
€ 10,000,000
the bank’s net worth
€ 10,000,000
total
€ 90,000,000
total
€ 90,000,000

But shadow banks don’t need to comply to these regulations because they don’t have depositors. And so the balance sheet of a shadow bank might look like this:

debit
credit
mortgage-backed securities
€ 500,000,000
short-term lending in money markets
€ 490,000,000
insurance and credit lines
the shadow bank’s net worth € 10,000,000
total
€ 500,000,000
total € 500,000,000

What is so great about shadow banking, at least for bankers? If banks borrow at 2% and lend at 4%, the ordinary bank can make € 1,400,000. The bank’s net worth is € 10,000,000 so the return on investment is 14%. But the shadow bank can make € 10,000,000 and the return on investment is 100%. And you can imagine how great this is for bonuses. Only, if something goes wrong, there is little capital to cushion losses. That’s not a problem for the bankers because by then they have already cashed their bonuses. But it could become our problem as shadow banks can blow up the financial system.

If the loans drop 10% in value because some home owners fall back on their mortgage payments, the capital of the ordinary bank can cushion the loss of € 8,000,000, while the shadow bank goes down in flames leaving an unpaid debt of € 40,000,000. And now we get to the point where financial system blew up. It is the insurance and credit lines part on the balance sheet of the shadow bank. There is no value attached because credit lines so insurances don’t show up on balance sheets or only for a very low amount.

Ordinary banks guaranteed credit to shadow banks just in the case investors like money market funds didn’t want to invest in shadow banks any more. The great thing of credit lines for bankers is that they get a fee for these credit lines while they don’t appear on the balance sheet so that banks don’t have to cut back their lending. When homeowners fell behind on their payments, investors didn’t want to invest in shadow banks any more, and these credit lines had to be used. This means that ordinary banks had to step in and suddenly their capital wasn’t sufficient to cover the losses. Also going down in flames, were the insurers of mortgage-backed securities.

The United States had a government policy of stimulating home ownership. Under the guise of this policy mortgages were given to people who couldn’t afford them. Behind the scenes usury was to blame. If there was doubt whether the borrower could afford the mortgage, a banker could charge a higher interest rate to compensate for the risk. This made the mortgage even less affordable to the borrower. The solution for that problem was giving ‘teaser rates’, meaning that the interest rate was low during the first year so that the home owner could afford the mortgage payments at first. Meanwhile the mortgage was packaged in a mortgage-backed security so the banker was already off the hook when the home owner fell behind on his or her payments.

And there is more. Shadow banks offer higher interest rates to their investors. Shadow banks don’t have a lot of capital so investing in them is a more risky than putting money in a bank account of a regular bank. Investors in shadow banks need a compensation for that risk. That’s no problem because the enterprise is very profitable. It is therefore possible for shadow banks to pay higher interest rates. This might not be possible if interest was forbidden, unless shadow banks had a lot more capital to cover their losses, but that would solve the problem of them being too risky. It is usury that allows for risky schemes like shadow banks to exist.

The multi-trillion-dollar derivatives monster

In 2016 the notational value of all outstanding derivatives is estimated to be $650 trillion. This is the so-called multi-trillion derivatives monster. This figure is more than eight times the total income of everyone in the world.3 Some people are spooked by the sheer size of that number. And indeed, derivatives can be dangerous. In 2003 the famous investor Warren Buffet called derivatives ‘financial weapons of mass destruction’.

Five years later derivatives played a major role in the financial crisis. An improper use of derivatives nearly brought down the world financial system. But derivatives can be useful. Most banks use derivatives to hedge their risks. Banks that managed their risks well using derivatives fared relatively well during the financial crisis compared to banks that didn’t.4 Therefore, derivatives are probably here to stay.

But what about the multi trillion monster? The number is a notational value, not a real value. Derivatives are insurance contracts, often against default of a corporation, a change in interest rates, or home owners falling behind on mortgage payments. You may have a fire insurance on your house to the amount of € 200,000. This is the notational value of the contract. You may pay the insurer € 200 per year. That is the real value of the contract, until something happens, that is.

If your house burns down, the contract suddenly is worth € 200,000. Insurers often re-insure their risks, which is a prudent practice. But re-insurance makes the notational value of the outstanding derivatives increase. So if your insurer re-insures half of your fire insurance to reduce its risk exposure, another contract with notational value of € 100,000 is added to the pile of existing insurance contracts.

So what went wrong? If suddenly half the houses in a nation catch fire because there is a war, insurers go bankrupt. The cause of the financial crisis was many home owners falling behind on their payments at the same time so that insurers of derivative contracts like mortgage-backed securities went bankrupt. The American International Group (AIG) was the largest insurer of these contracts and it was bailed out with $ 188 billion. The US government made a profit of $ 22 billion on this bailout, but only because the financial system wasn’t allowed to collapse.

In a financial crisis a lot of things go wrong at the same time. The financial system can’t deal with a major crisis. If it happens, it may cause the greatest economic depression ever seen, and in retrospect it may herald the collapse of civilisation.

The usury issue

Money circulation in the economy is like blood circulating in the body. It makes no sense for a kidney or a lung to keep some blood just in case the blood stops circulation. The precautionary act makes the dreaded event happen. It is a self-fulfilling prophecy. A financial crisis is like all parts of the body scrambling for blood at the same time. When the blood circulation stops, a person dies. An if the money circulation stops, the economy dies. Hoarding is to blame for that.

Perhaps big banks are too big to fail. Breaking them up may not help because the banking system is closely integrated. Banks lend money to each other. If a few banks fail then others get into trouble too. And in a crisis all the trouble happens at the same time. So perhaps it is better to address the cause of failure itself, which is interest on money and debts. And it may be possible because interest rates are poised to go negative.

A tax on cash makes negative interest rates possible. It can also keep investors from hoarding money. If money keeps on circulating, there may never be a crisis. The crisis happened because investors scrambled for cash when they feared they might lose money on bad debts. But if they expect to lose more on cash, they might keep their debts. And there may have been fewer bad debts in the first place if there had been no interest on debts as interest is a reward for risk.

Featured image: Graffiti near the Renfe station of Vitoria-Gasteiz. Wikimedia Commons. Public Domain.

1. The rise of money trading has made our economy all mud and no brick. Alex Andreou (2013). The Guardian. [link]
2. The Rise of Finance. Evan Soltas (2013). Economics and Thought. [no link because the information has been removed]
3. Here’s What Makes the Derivatives “Monster” So Dangerous (for You). Michael E. Lewitt (2016). Money Morning. [link]
4. Financial innovation and bank behavior: Evidence from credit markets. Lars Norden, Consuelo Silva Buston and Wolf Wagner (2014). Tilburg University. [link]

Arab farmer taking straw to his farm. Public domain.

Clutching at a Straw

Fleeing is no longer possible

As mentioned earlier, I read The Limits of Growth in my late teens. Having hoped to live for another sixty years or so, I was informed by that book that a computer had calculated I would live to see the end. And who would argue with a computer, an entirely logical device? Time was ticking. Tic toc tic toc. As a child, I dreaded the future whenever the song Vluchten Kan Niet Meer (Fleeing Is No Longer Possible) was on the radio. It unnerved me profoundly, as it painted a dismal future in which nature would be gone. The ticking clock had made me run for cover as a toddler. That gloomy mood faded when I went to secondary school, and for a long time, the coming doom hardly crossed my mind.

That was until I read The Limits of Growth. It featured dreadful graphs showing decades in advance how resources would run out, and billions of people would die. Two decades had passed since then, and everyone had ignored it. It led me to join a local environmentalist group, Friends of the Earth, after finishing my studies. That was in 1993. My political affiliation had gradually trended to the centre-left. For a long time, I had believed that there was no alternative to capitalism, but gradually I realised that it also meant there was no alternative to doom. And so there had to be an alternative. It was impossible, but it was necessary. And that thought settled.

Friends of the Earth is an international organisation known in the Netherlands as Milieudefensie, with local activist groups, most notably in student towns like Groningen. We researched issues and tried to convince people. Friends of the Earth also lobbies with politicians and pressures corporations. We were a hodgepodge of students, people with jobs, unemployed, activists, and ordinary people, led by a woman in her thirties who acted like an Akela in the Boy Scouts. A 22-year-old student was her boyfriend.

We were not as militant as Greenpeace, but sometimes we protested. Once, we blocked the entrance of Groningen Airport to object to the government subsidies for the airport. The police came and told us to leave, which we did. It made me realise that activism wouldn’t solve the world’s problems. What could you do? If you went extreme and vandalised property, people would hate you for it, and it wouldn’t change the world. Starting a political party wouldn’t help. Think of what must be done and promise that you will do it. Few will vote for that. Even the most ‘extreme’ environmental party, the Green Party (GroenLinks), didn’t have what it takes, and they had only a few seats. That did not bode well.

And finally, if the Netherlands was going to do it, but no one else would, it wouldn’t help. And then there is the competition in the economy. Businesses will go bankrupt if they do more to save the environment than others. Their products would be more expensive, and we wouldn’t buy them, except for those who care enough for the environment to pay more. The group had about thirty active members and was divided into subgroups centred around specific issues such as vegetarianism, factory farms, air pollution, and economics. Economic issues caught my interest.

My mind was often grinding. It was like Hegelian dialectic, so trying ideas and looking for reasons why they would fail. You can ask hypothetical questions. Is it possible to make capitalism sustainable and just? Fat chance. Wasting is the essence of the system. If capitalism doesn’t solve these problems, then why not try socialism? Would that work? Probably not. People want more stuff. Democracy? Authoritarianism? Likely not. Can we make nature sacred? They will laugh at the idea. Money is sacred. All I got was an increasing pile of objections as to why ideas don’t work. I was too realistic to get carried away by any idea. History is full of examples of ideas going wrong. You can discard most ideas without even trying. That was the benefit of knowing history all too well.

No frivolous accounting

Friends of the Earth in Groningen was a small outfit, so compared to the art festival at the university campus, the yearly budget was negligible, about 6,000 guilders (€ 2,723). It covered the group’s activities. We were short of money. That changed once I became the treasurer. I took measures to make expenses match project income. Everything had to be accounted for. I eliminated the use of cash and required everyone to deliver receipts and state their purpose. I transferred the money via bank transfer, so it was clear where the money went. Yet, luck played a major role.

Each year, we received two grants of 2,500 guilders (€ 1,134), one from the province of Groningen and one from the municipality of Groningen. The provincial administration had just denied the allowance we had received in previous years. We could appeal to the decision at the Appeals Commission, which we did. Then I went to the Provincial House to discuss the issue with the official responsible for the grant. He explained that our request had been late and that the money jar was empty. I asked him whether there was any point to the appeal. He said no. It was a done deal.

So, after receiving an invitation to a hearing at the Appeals Commission, I decided not to waste my time going. After all, it was a done deal. One of the commissioners called me after the hearing to ask why we hadn’t shown up. And I told him. That probably touched a nerve, as it gave him the impression that no one took the Appeals Commission seriously. Our appeal was granted, and we received the subsidy. As I had made a budget that didn’t anticipate this money and had implemented budgetary discipline, we ended up with income exceeding expenses.

Once over a cliff, a cartoon character might clutch at a straw to save itself. Only in animated pictures does the straw hold. The Dutch saying ‘clutching at a straw’ means grasping at your last hope. On economic issues, the local group of Friends of the Earth worked together with Strohalm, or more precisely, Rinke. He lived in Groningen and was actively engaged in Strohalm and its ideology. He was on social benefits, and his career was working for Strohalm and Friends of the Earth. He was serious about his job and worked hard. The meaning of the Dutch word strohalm is straw.

The people of Strohalm claimed that the economy must grow to pay interest. Interest rates can’t go below zero, and if debts aren’t repaid with interest, the financial system collapses, so it is grow-or-die. And interest adds to the principal until infinity. To deal with that problem, I later figured that central banks print money to fill the gaps and aim for inflation, which is why it hadn’t collapsed. Sound accounting attracted me, so this made me think. And the idea of economic growth is frivolous accounting if you are the accountant of our planet’s resources. Many people worry about government deficits, but not about the overexploitation of the earth. And so, the cranks run the show in this world with insane planetary accounting schemes and delusions about growth. And the global economy and financial system create oceans of wealth and deserts of poverty, Srohalm argued.

Strohalm aimed to end interest by charging a holding fee on money. You don’t have to pay the fee if you lend your money. In this way, it could be attractive to lend money without interest. Natural Money as an idea thus already existed back then. Silvio Gesell introduced the holding fee in his 1916 book The Natural Economic Order. Strohalm also promoted local money. And Strohalm promoted local solutions to shield the local economy from international financial markets, such as local currencies.

When you buy groceries at your local supermarket, you have no clue where your money ends up and what it helps to accomplish. The supermarket chain may use it to build a new distribution centre. One of the contractors there might exploit immigrants. It is hard to do something about that, but it made me aware of the impact my money has on the planet and on other people. I moved most of my savings to an ethical bank, first ASN and later Triodos. Later, I also started buying Fair Trade products.

With local money, you could oversee what it accomplishes. And so, Strohalm began a LETS (Local Exchange Trading System) in Groningen. We exchanged goods and services using fictitious currency with a holding fee. It soon dawned upon me that LETS would accomplish very little. It was more of a tea party than a viable alternative for the regular economy. The exchange circle had a few hundred people, and many weren’t very active, so there were only a few products and services. And most weren’t things you needed. You might get a Reiki healer but not a handyman.

If your skills had market value, you wouldn’t exchange them in the LETS circle because you could get guilders you could spend everywhere. Thus, it was not only a matter of scale but also of commitment. The people in the exchange didn’t offer valuable skills or products, either because they didn’t have them or because they could fetch more in the market. You could say that people value money more than community, but you could also say that people tried to make money from their hobby, so they didn’t have to work for a living.

The people in such a scheme were mostly idealists who wanted to change things rather than people who would get things done. For a closed economy to work, the community needs scale to fulfil most of its needs. And it must produce tradeable goods and services to fulfil the remainder of its needs. Above all, building such a community requires commitment. Everyone must contribute, make themselves useful by acquiring new skills if needed, and accept a lower standard of living because they forgo the benefits of the division of labour in international markets. How can you achieve that?

Friends of the Earth Groningen once held a camp to work on our persuasion skills. Rinke was one of the organisers. He specifically praised me and called me an example for the others. That couldn’t be because of my communication skills. What set me apart was that I knew very well what other people were thinking and how they would react. My parents and some of my friends disapproved of my joining the environmentalists. And I didn’t try to convince others of my views, but merely tried to figure out how much they were willing to go along with them. Everyone knows that dumping garbage in nature is not okay. You can use that.

My parents found environmentalists a nuisance at best. When, in 2012, the socialists, led by Diederik Samsom, had a chance to win the elections, they were alarmed because Samson had been with Greenpeace as a student. A former environmentalist running the country was their worst nightmare. Perhaps you can see the irony of that. They considered voting for the conservative liberals (VVD) rather than the Christian Democrats (CDA), for which they had voted all their lives, to prevent that from happening. And so, there is no point in arguing. Did I ever convince anyone of my political views as a teenager? Probably not. That lesson I had learned already as a young man.

Few people are willing to change their lifestyles for the welfare of animals or future generations. Blocking roads would make people angry. People want to drive cars and don’t care about climate change. Strohalm proposed a tax on air travel because air travel is highly polluting and a luxury. Environmental taxes would raise prices and infuriate people. Taxes have caused revolutions. People aren’t willing to give up their right to murder their children. I didn’t give up on environmentalism just because we were heading for the apocalypse, but annoying people wasn’t the way to solve the problem. Only that wasn’t particularly satisfactory. If you accept doom, you might as well commit suicide right away. And so, there must be a way, even if there isn’t.

And there were issues with interest-free money. Why would you lend out money without interest if you could receive interest elsewhere? If you can borrow money at an interest rate of zero, you could borrow as much as you can and put it in a bank account at interest. That is not going to work. That was my grinding mind, looking for failures. It is an occupational hazard if you work in IT. A programme always has errors, and it is better to find the bugs before running it. Cleaning up the mess afterwards is far more work. Still, if interest is the root cause of social and environmental problems and can destroy human civilisation, we must make interest-free money work, even if it never will.

And perhaps it could work. During the Great Depression, a small Austrian town, Wörgl, had money featuring a holding fee. It was a stunning success. A similar money had existed in ancient Egypt for over a thousand years. The Egyptians used receipts for grain stored in the granaries as money. These receipts had a holding fee to cover storage and putrefaction. A Strohalm book related it to the biblical story of Joseph, who supposedly had introduced these granaries to weather seven lean years. If it can work for a thousand years, it can work forever. If only we could uncover the key to these successes. That was a reason not to let go of the idea. Maybe the impossible is possible.

In 1997, I moved to Sneek to live with my wife, Ingrid. Sneek had no local Friends of the Earth group, so I stopped being an active member, but I kept using public transport. Not owning a vehicle while working in IT consultancy for 10 years was a considerable sacrifice. Living in Groningen had made that possible. It was a remote corner of the country. My jobs were either in Groningen itself or so far away that I had to stay in a hotel. In Sneek, I could use Ingrid’s mother’s car if needed. Still, life without a car is quite uncomfortable. And my sacrifice was pointless. More and more people drove SUVs. They didn’t care. They figuratively gave me the middle finger, and their message was, ‘If you don’t ruin this planet, we double down our efforts.’ That was not what these people were thinking, but terrorists at least believed they were doing it for a good cause, and these SUV drivers must have known that they were doing something wrong, at least if they had a conscience.

If you can do an IT consultancy job for ten years without owning a car, few people really need one. But who will tell them to ditch their cars and move closer to their jobs, or cram into crowded buses and trains for a journey that lasts up to twice as long? We can replace vehicles with public transport, but few people would do that voluntarily. The Dutch nickname for the car is ‘Holy Cow’ for a reason. In 2003, Ingrid’s mother’s vehicle broke down, and she didn’t buy a new one. Having never aspired to higher moral standards than others, at least if they are pointless, I bought a car. It must help. Otherwise, you are just having a hard time, with nothing good coming of it. We used the car to go to my parents’ home in Nijverdal or the forest in Rijs, as there was no forest near Sneek.

Becoming your avatar

Between 1998 and 2002, I was a freelance IT specialist. Lots of money came in, so there was some capital to invest. My first investments were small and unprofitable because I believed that profits mattered. At the time, loss-making internet startups did well in the stock market, while profitable corporations did poorly. Understanding financial markets seemed challenging, which made me think I had to stay informed and join the IEX investment message board. At the time, I still occasionally said, ‘With SuperB***,’ when picking up the phone. That once led to a hilarious moment when I expected a call from Ingrid, but it turned out to be from Martien. And so, that name became my avatar. I also took the Financial Markets course at the Dutch Open University.

Later, I changed my avatar name after someone noted that SuperB*** sounded arrogant. From then on, I never answered the phone, saying, ‘With SuperB***.’ That was no longer needed to feel better. A strange thing about avatars is that you somehow become this person, SuperB***, on the message board. People don’t know you, only the avatar. Readers began to expect serious commentary and strong writing from SuperB***. And so, I introduced a few other avatars with fanciful names like IEKS! (a Dutch exclamation of shock that sounds like IEX) or Schaduwschaap (shadow sheep) to be someone else and have fun. And I wasn’t the only one. Others also came up with fanciful names like mooiepipo (beautiful clown), danger money, !@#$!@! (some curse) or Schraalhans (a Dutch joke). Some also used multiple avatars, so the message board became a playground for practical jokes.

Usually, the name had some witty meaning. It could be something like this, ‘Buy And Hold (BAH) is for sheep and sheep say bah and like to live a calm life in the shadows, hence shadow sheep.’ Walhalla Raaskalla, which means something like mad ravings in the heavens of the Viking gods, just sounded funny. And it rhymed. MMWOPS stood for ‘Making Money While Other People Sleep.’ It was the name of an American scam company defrauding the Dutch shipbuilder RSV, which went bankrupt in 1984 despite receiving two billion guilders in government support. Most of my avatars didn’t last long, except Dikkevettebeer (big fat bear), who believed the stock market would crash to zero and the gold price would rise to infinity. Bears believe that stocks go down, and the stock market went down at the time, so the bears grew fatter.

Some people were promoting certain stocks and hoped others would buy them, so they could profit. Some people were there to defraud others. And you couldn’t see each other face-to-face, which promoted paranoia. You see that on social media today. Can you trust other posters? Do they have a hidden agenda? There is a lot of misinformation. Some governments and corporations pay people to spread their propaganda. Some believe other posters who disagree with them get payment.

A colourful investment fund manager, Michael Kraland, ran the message board. He wrote entertaining commentaries. At the time, he rode the hype of the internet and telecom bubbles. His strategy was risky and not sound advice to inexperienced investors. It was even more irresponsible because his boasting made uninformed people invest in these crappy stocks. And because he was a boaster, he received nasty negative comments on the message board, including unproven accusations of wrongdoing. And perhaps also because he was a Jew, which seemed not accidental, as he worked in finance, and there are many Jews in finance. And even though, as far as I know, he never did anything illegal, I considered him a dubious character.

You could witness what Keynes called ‘animal spirits’ on the message board, experience the fear and greed of small investors, and become part of it. You hope your investments do well and fear they will not. I traded in stock options and made a few huge gains, but overall, I lost. Human emotions often drive the decisions people make about their investments. I was not much different. Those who had success imagined they were geniuses. And then they lost it all when the bubble collapsed. I wasn’t good at picking stocks or trading, but I didn’t take many risks.

Introduction to conspiracy thinking

After some time, a day trader named Cees joined the IEX message board. A day trader is someone who tries to make a living out of trading rather than investing. About 90% of the people aren’t successful in trading and lose money, including me, for I have tried trading stock options for a while. Cees began sharing conspiracy theories from US message boards and websites. One was about the Plunge Protection Team. If the markets were about to collapse, a secretive group called the Plunge Protection Team would come to the rescue. A stock market crash could undermine confidence in the financial system run by Wall Street. They couldn’t allow that to happen.

Many ridiculed Cees at first, but after the internet bubble had popped and even more so after 9/11, markets often miraculously recovered due to massive buying in the futures markets just before they crashed, so his credibility gradually rose. It probably wasn’t entirely true, as the stock markets declined dramatically between 2001 and 2003 during one of the most epic bear markets in recent history. Still, something fishy was definitely going on there. And the gold price regularly plummeted due to sudden selling at irregular hours when most markets were closed.

Cees believed central banks were orchestrating this to bolster confidence in their currencies. He wrote that if the gold price were to rise, the public would lose trust in central bank money. In times of thin trade, you can sell a bit of gold to make the price drop. The trick was to break a trend. Trend followers, called technical traders, would join the bandwagon and sell more gold, lowering the price further, in a manipulative cycle. The purpose of the trade was to bring the price down, which made sense because if a rational investor planned to sell gold, he would seek the best price. And these sales at quiet hours caused the price to crash. These kinds of intriguing posts kept the reader’s attention.

The gold market was rigged like most markets, but not in this spectacular manner, other pundits explained. They would look at traders’ positions in the Commitment of Traders (COT) report to predict price movements. So, if the category of small speculators had loaded up on precious metals, prices would probably go down. Gold mining corporations sell gold in advance on futures markets to make their budgets predictable and plan their operations. The bullion banks were the intermediaries. These banks sold that gold in futures markets to hedge their risk and played the market to enhance their profits. Successful traders exploit our emotions with deception. They spread false information about central banks selling gold to scare suckers on gold bug sites into selling. Once the bullion banks had sold all their inventory on the futures market, they might crash the price to repurchase it at a lower price. And so a veritable conspiracy theorist should have asked, ‘Who profits from these conspiracy theories?’ You can ask the same question about many other conspiracy theories. Who profits from undermining trust in society and its institutions?

Meanwhile, I found alarmist websites about Peak Oil, claiming that oil production was about to decline. There were also websites denying global warming. Most people wouldn’t take them seriously and believe what the scientists say, but I looked into them to see what they had to say. Having studied the philosophy of science, it was not hard for me to uncover the brazen lies, falsifications and misinterpretations of the facts in the climate change denial scene. And they claimed climate scientists committed fraud. People want to believe it. Like my sister once said, ‘I will believe in Santa Claus as long as he brings me presents.’ The benefit of denying climate change is having the comfortable feeling of not needing to change your excessive consumerist lifestyle. The Internet proved to be an ideal platform for cranks to spread their nonsense, making me think there would soon be, like Peak Oil, a time of Peak Bullshit, where the truth would have gone lost entirely. Only, I never thought of what would come after that. The name suggests that after reaching a peak, bullshit would decline.

There was reason to be suspicious. The United States was the centre of a global empire financed by the US dollar’s reserve status, so the Powers That Be (TPTB) would, in all likelihood, protect the financial system at all costs. A collapse could mean the end of their trade and usury empire and their insane profits. I had already bought gold for other reasons and didn’t trust financial markets or those who operate them. And so these stories intrigued me, and I began to visit the sites Cees mentioned. American gold and bear websites complained corporations pumped up profits with frivolous accounting, thereby abandoning the tedious Generally Accepted Accounting Principles or GAAP, which made me smile because GAAP is Dutch for yawn. For the record, a bear is an individual who believes markets will go down and invest accordingly, while a bull thinks markets will rise and invest accordingly.

Those running the financial markets might be pulling out every lever to keep the Ponzi scheme of interest-bearing debt going. Debts continued to grow, as did interest payments, so there could soon be a day of reckoning. I had read ‘The Limits of Growth,’ so I knew that collapse was inevitable. The bear websites reminded me of that. If the sky has come down on you once, as it did to me as a student, you worry it might happen again. It made me on edge concerning my investments, which wasn’t helpful for profits. Gold was a long-term investment, as owning gold could help weather a financial collapse, so I didn’t care much about gold price swings. I sometimes hoped that the corrupt system would collapse, but that was because I hadn’t fully considered the consequences. If you come to think of it, it is unlikely that something good would come out of it.

Back then, conspiracy websites appeared reasonable because they investigated issues that the mainstream financial press did not. But it is a slippery slope. There are all kinds of secret goings on, but the imagination of the conspiracy theorists has no limits. You can go nuts if you don’t perform a regular reality check. Your beliefs will get farther from reality. When I revisited these sites in the early 2020s, they had gone delusional, disseminating misinformation about vaccinations, global warming and the 2020 US elections. The Dutch would call them Wappies. They never ask themselves, who profits from our nuttery? But also, if you rationally look at reality, you might go insane as well. The world is insane.

In 1999, I had already bought my first gold. The gold price had reached historic lows. Gold mines were loss-making and closing, making me smell total apathy toward precious metals, suggesting a generational low point. It made me think that it could be the beginning of a long-term trend of rising gold and silver prices that might last a decade or more. And feeling that an apocalypse could come, it was an insurance. And so, I went to my bank to open a gold account. They sent an investment advisor to talk me out of it. He said, ‘No one does that anymore. I know a man who has had a silver account with us for two decades. Silver has gone nowhere all that time. Gold mines are making losses because the price of gold is only going down. You should invest in the stock market instead. Stock prices only go up.’ It reinforced my belief that it was the perfect time to buy gold, so I pressed on and opened a gold account. Perhaps the investment advisors at the bank office had a good laugh that day.

Nijverdal, where I lived as a child, was the scene of a gold rush in 1901. It was the only place in the Netherlands that ever had a gold mining operation. The rush was short-lived because the ore concentration was lower than previously thought. In Sneek, I bought a goldsmith’s home. That is an interesting set of coincidences. There are no precious metals accounts anymore. Today, precious metals ETFs are essentially the same. I had gold coins in a safe-deposit box at a bank to weather a possible financial collapse. Later, I also acquired silver bars and coins, about 75 kilogrammes in total, and stored most of them in a safe deposit box at another bank. I did this, fearing financial collapse due to reckless debt creation and humanity’s depletion of resources.

A thought that didn’t die

In 2001, after the Internet bubble had popped, I pitched interest-free money on the IEX message board. My lack of financial knowledge didn’t deter me. Everyone can participate in a debate on a message board, so you can exchange thoughts with people you wouldn’t meet otherwise. Others rebuked me time after time and pointed out my errors, so I gradually learned. Lengthy exchanges over several years resulted in unwieldy discussion threads. As these arguments proceeded, my knowledge of finance improved. If you are trying something new, you learn more from open discussions on the Internet than academic debates, often occurring in closed circles under rigorous standards that don’t allow you to speculate. Seeing the issue from different perspectives is more helpful than having in-depth knowledge of a narrow field. My persistence came from an unwavering belief in the insanity of ever-expanding debts and interest payments.

Interest payments destabilise the financial system because borrowers must return more than they borrowed. That money isn’t there, so someone must borrow the difference. If no one else borrows, the government or the central bank must borrow or print new money. Otherwise, a financial crisis and possibly an economic depression will ensue. That is why debts accumulate and why inflation happens. Interest-free money can be sound money because banning interest promotes responsible lending, stabilises the financial system and ends inflation. You don’t lend to someone you don’t trust if you receive no compensation for the risk of not returning the loan. You don’t need to incur more debt to pay off existing debts. That is the theory, but practical issues stood in the way. The market sets the interest rate. If you have money to invest and can receive interest, you won’t lend without interest. That is why economists never took interest-free money seriously. It was a domain of eccentrics like me.

The gold websites familiarised me with the Austrian School of Economics and their adherents, another eccentric bunch. Many were libertarians who saw government, rather than the love of money, as the root of evil. Usually, the private sector can produce a product or service more efficiently than the government, so they believe the government shouldn’t impose regulations or provide public services. They also had ideas about sound money and preventing irresponsible lending. They question banks’ money creation and dispute the need for central banks. Banks create money, which causes inflation. Central banks help banks in trouble, which promotes irresponsible lending. They hoped to limit money creation or return to a gold standard to enforce financial discipline.

They didn’t want governments or central banks to interfere with economic cycles, thereby accepting financial crises and economic hardship to cleanse the excesses. They argued that these corrections are necessary and beneficial as they would terminate poorly run businesses. And things would only worsen if you didn’t allow these natural cycles to run their course. They would argue that the central bank, the FED, had exacerbated the Great Depression and that its policies had contributed to the 2008 financial crisis, as its support for commercial banks had promoted reckless lending. They have little regard for mainstream economics, which underpins government and central bank actions to manage the economy, or what economists call fiscal and monetary policies, thus running government deficits, setting interest rates and printing money.

These issues troubled me as well, as did reckless lending. And so, we had a common ground. Paying interest on existing debts with new ones is fundamentally unsound. To me, funny accounting is an abomination and the basis of corruption. Banks profit from creating money. Inflation is the price we pay for their profits. Banks steal from us, most notably people with low incomes and those who don’t own stocks or real estate. If real estate values rise, so do rents, benefiting homeowners at the expense of renters. The underlying cause is usury, thus charging interest on money and debts, but few people notice. By their lending, banks create money and demand more in return, so we need more money to prevent the scheme from collapsing. And if the scheme collapses, like it nearly did in 2008, that could be the end of civilisation as we know it. For adherents of the Austrian School, charging a fee on currency and banning interest are out of the question, as they run counter to their view of ‘free’ markets. Those who accept a wage below subsistence level are free in their view, even when slaves have a better life.

They were a cult, with their own particular universe of facts. They believed the fairy tale that once the government had disappeared and markets were ‘free’, we would live in Paradise. Even though they were on opposite sides of the political spectrum, a comparison to communists is apt indeed. Both ideologies are like religions. Like communists have their prophets, such as Marx, Lenin, and Engels, libertarians have their own, such as Von Mises, Hayek, and Rand. Both have holy books. Communists have Marx’s Das Kapital or the Communist Manifesto, and libertarians have Rand’s Atlas Shrugged or Ludwig von Mises’s The Theory of Money and Credit. I didn’t read these books, but I have read several of their articles and had discussions with them, so over time, I learned about their beliefs. And perhaps that works better. You can better understand Islam by listening to the opinions of Muslims than by reading the Quran. That is my conclusion after reading the Quran and having had exchanges with Muslims on message boards. I also never read Karl Marx’s books.

If their ideology fails, communists blame the capitalists, while libertarians blame the government. The problem is that humans are unfit for communism, but also for free markets. Regardless of the system, people take advantage of each other’s weaknesses and the system itself. If you held alternative views like me, they accused you of being Keynesian, which seemed worse than being Satan himself. They would argue for ending minimum wages and sell it as a way to help the poor. So, if you can’t earn a subsistence-level income in the so-called ‘free’ market, letting you starve would help you.

If their ideology fails, communists blame the capitalists, while libertarians blame the government. The problem is that humans are unfit for both communism and free markets. Regardless of the system, people take advantage of each other’s weaknesses and the system itself. If you held alternative views like me, they accused you of being Keynesian, which seemed worse than being Satan himself. They would argue for ending minimum wages and sell it as a way to help the poor. So, if you can’t earn a subsistence-level income in the so-called ‘free’ market, letting you starve would help you. To illustrate the mood among these people, on 23 February 2026, someone posted on the Austrian Economics subreddit, ‘It’s time for welfare reform: Maybe food is so expensive because 42 million people get it for free.’ Letting people die of starvation will lower food demand, which might lower food prices. Letting poor people starve for lower food prices for the rich is their line of thinking.

These Austrians may come up with all kinds of charitable motives as to why poor people should starve to pay for the boob jobs of rich women. It is how free markets work. If they were to run the world with their 19th-century views on economics, we would end up in an Oliver Twist novel. They were preoccupied with money like me, but in a way as if only money mattered. From that narrow perspective, their views make sense. Like them, I looked for a sound monetary system, so their views had my interest. Yet, they are a gathering of Scrooges McDucks fearing rot in their money vaults. A funny coincidence is that their hero, after whom they named their website, is Ludwig von Mises. So Mises for misers. Wall Street may be much more evil than they are, but they represent money worship in its purest form. Something isn’t quite right about these people. Central bankers may be the high priests of the money religion, but the Austrians consider them heretics. They are the true faith of Mammon, that is. And the great thing about them was that they had an unparalleled religious zeal to prove me wrong in monetary matters.

They raised new arguments and brought to my attention every error in my thinking they could find. And so, my mind kept grinding. Whatever these people say, the root of frivolous accounting is charging interest on money and debts. It may not be possible to end it because if you do, lending might stop, and the economy might collapse. However, if you investigate a problem, you must at least correctly identify the root cause. Otherwise, the solution will remain out of sight. Charging interest leads to crises. Only you can’t tell Scrooge McDuck. He thinks there is no life after usury. And so, I learned as much from the Austrians as from Strohalm. And perhaps it is no coincidence that the miracle of Wörgl happened in Austria. The answer to the issue that kept the Austrians awake at night, sound money, had been quietly gathering dust in their backyard all along.

In this way, two opposing fringe ideas, which were interest-free money with a holding charge and the Austrian School view, challenged each other in my mind. It was Hegelian Dialectic at its finest. I wasn’t constantly brooding over this issue, but I couldn’t let it go either. In 2008, this resulted in the synthesis of Natural Money. In a gold standard, you need positive interest rates to get the economy going. As a result, you end up with debts you can never repay in gold. At some point, you must face collapse or leave the gold standard. The latter is the easy short-term solution, so you can leave the problem for future generations to solve. Like Keynes said, ‘In the long run, we’re all dead.’

When you do that, the sky is the limit, and debts escalate to infinity, which we have seen happening, most notably after the end of the last remnant of the gold standard. The long run is now over, and Keynes is dead. It is up to our generation to address the problem. Limiting the interest rate to zero can curb money creation and stop irresponsible lending. If the money supply is stable and the economy grows, prices, including the gold price, would drop. And so, a well-managed currency with a holding fee could be stronger than gold. The economy can perform better without interest, allowing interest-free money to yield better returns. That was the beginning of Natural Money. Over the following decade, I developed a more comprehensive theory using modern monetary economics.

Latest revision: 21 April 2026

Featured image: Arab farmer taking straw to his farm. Public domain.

Of Usury, from Brant's Stultifera Navis (the Ship of Fools)

The Problem Of Interest

Compounding

Imagine that Jesus’ mother had put a small gold coin weighing 3 grammes in Jesus’ retirement account at 4% interest just after he was born in the year 1 AD. Jesus never retired but he promised to return. Suppose now that the account was kept for this eventuality. Imagine now that the end is near, and that Jesus is about to return. How much gold would there be in the account in 2018?

It is an amount of gold weighing 11 million times the mass of the Earth. The yearly interest would be a gold nugget weighing 440,000 times the mass of the Earth. There is a small problem, a fly in the ointment so to say. It would be impossible to pay out Jesus because there simply isn’t enough gold.

It might seem that the bank had to close long ago because of a lack of gold, but that isn’t true. As long as Jesus doesn’t show up it can remain open, at least if the borrowers are allowed to borrow more to pay for the interest. If the economy grows 4% it may not be such a big deal. The interest can be created out of thin air by making new loans that allow borrowers to pay for the interest. And if Jesus doesn’t claim his gold when he returns and accepts bank credit, everything will be fine.

There is a limited amount of gold while compound interest is infinite. As long as bankers can create money out of thin air to pay for the interest and people accept bank deposits for payment, everything is fine. Problems only arise when people demand real gold. A bank can go bankrupt when depositors want to take out their deposits in gold.

Central banks

Perhaps Jesus’ retirement account isn’t such a big problem after all. Our money isn’t gold but currencies central banks can print. Assume now that Jesus’ mother had put one euro in the account instead. One euro at 4% interest makes 22,000,000,000,000,000,000,000,000,000,000,000 euro after 2017 years. That may seem an intimidating figure, but the European Central Bank can take 22 pieces of paper and print 1,000,000,000,000,000,000,000,000,000,000,000 euro on each of them. And there you are. Something like this happened during the financial crisis of 2008. This is called quantitative easing. You may have heard that word before.

Central banks can print new dollars and euros to cope with a shortfall. In fact, this is what central banks often do. There is always a shortfall because of interest because most money is debt and interest on this debt needs to be paid. To make up for the shortfall, there are two options. First, people can borrow more. Second, central banks can print new currency. Both things can happen at the same time. Central bank decisions about interest rates are also about dealing with the shortfall caused by interest charges.

When central banks lower interest rates, people can borrow more because interest rates are lower. Central banks lower interest rates when people are borrowing less than is needed to cope with the shortfall. If central banks raise interest rates, people can borrow less because interest rates are higher. Central banks raise interest rates when people are borrowing more than is needed to cope with the shortfall and the extra money makes people want to buy more stuff than can be made. And if people don’t borrow at all, this is a crisis, and central banks may print more currency to cope with the shortfall.

Interest on capital versus economic growth

There is a problem central banks can’t fix by printing more currency. Interest is more than just interest on money. Interest is any return on investment. Throughout history returns on investments were mostly higher than the rate of economic growth. Most of these returns have been reinvested so a growing share of total income was for investors. This can’t go on forever because who is going to buy the stuff corporations make in order to keep these investments profitable? A simple example can illuminate that.

interestvers
Interest income (red) versus total income with interest income growing faster than total income

The graph above shows how total income and interest income (in red) develop with an economic growth rate of 2% and an interest rate of 5% when interest income starts out as 10% of total income and all interest income is reinvested. After 25 years the economic pie has grown faster than interest income and wages have risen. At some point interest income starts to rise faster than total income, and wages go down. After 80 years there’s nothing left for wages. This graph explains a lot about what is going on in reality.

In the short run it was possible to prop up business profits and interest rates by letting people go further into debt to buy more stuff. In the long run, the growth rate of capital income cannot exceed the rate of economic growth. Interest rates depend on the returns on capital so this can explain why interest rates went down in recent years. In the past interest rates below zero weren’t possible but from time to time there were economic crises and wars that destroyed a lot of capital. This created new room for growth.

Wealth inequality and income inequality

When interest rates go down, the value of investments tend to rise. If savings yield little this benefits the wealthy as most people have their money in savings while the wealthy own most investments. But it is important to know the cause otherwise you might think that interest rates should rise. The graph above shows that wealth inequality causes interest rates to go lower, hence redistributing income, for example via higher wages or taxes on the wealthy, can bring higher interest rates.

There is a difference between wealth inequality and income inequality. Your labour income and the returns on your investments are your income. If you are rich but make no money on your investments, your wealth doesn’t contribute to your income. In reality wealthy people make better returns on their investments than others because they have better information and can take more risk. Still, the graph shows that income and wealth inequality can’t increase indefinitely, and that returns on investments can’t exceed the reate of economic growth in the long run, hence interest rates need to go lower.

Most people pay more interest than they receive. The interest paid on mortgages and loans is the proverbial tip of the iceberg. Interest is hidden in rents, in taxes because governments pay interest on their debts, and the price of every product and service because investments have to be made to make these products and services. German research has shown that 80% of the people pay more in interest than they receive, while only the top 10% of richest people receive more in interest than they pay. Lower interest rates benefit most people despite some side-effects that work in the opposite direction.

Economic cycles

Humans are herd animals. They buy stuff and even go into debt to buy stuff when others are going into debt to buy stuff too. Suddenly they may realise that they have bought too much or have gone too deeply into debt, and all at the same time. One day they may be borrowing money, queueing up before the shops, and bidding up prices. The next day, they may decide to pay off their debts, leaving the shop owners with unsold inventories they have to get rid of at fire sale prices. So prices may go up when people are in a buying frenzy and may go down when sales dry up.

When there is a buying frenzy business owners are optimistic and do a lot of investments, and often they go into debt to make those investments. But if suddenly customers disappear, they may be stuck with unsold inventory and debts they cannot repay. Businesses may then have to fire people. Those people are then left without income, and cannot repay their debts too, so sales will go down further. If their debts are not repaid, banks could get into trouble. In most cases the economy will recover. In the worst case banks go bankrupt, money disappears, the economy collapses, and an economic depression takes off.

Interest can make things worse. Assume that you have a business and expect to make a return of 8%. You have € 100,000 yourself and you borrow € 200,000 at 6%. You expect to make 8% so borrowing money at 6% seems a good idea. If you only invest your own € 100,000 you can make € 8,000, but if you borrow an additional € 200,000 you can make € 12,000 (8% of € 300,000 minus 6% of € 200,000, which is € 24,000 minus € 12,000). The balance sheet of your business might look like this:

debit
credit
inventory
€ 250,000
loan 6%
€ 200,000
cash, bank deposits
€ 50,000
owner’s equity
€ 100,000
total
€ 300,000
total
€ 300,000

If sales disappoint and you only make a return of 2% on your invested capital of € 300,000, which is € 6,000, you make a loss because you pay € 12,000 in interest charges. You may have to fire workers. Businesses can go bankrupt because they have borrowed too much and have to pay interest, even when they are profitable overall. Sales often disappoint when the economy fares poorly. This means that more businesses face the same difficulties and make losses because of interest payments. They may have to fire workers and these workers lose their income. This can worsen the slump.

Interest, economic depressions and war

Silvio Gesell discovered that interest rates can’t go below a certain minimum because lending would then stop. Money would go on strike as he put it. Why is that? Low yields make investing and lending money unattractive because of the risks involved. Debtors may not repay and banks may go bankrupt. Depositors then prefer to take their money out of the bank and keep it with themselves.

This can cause economic crises and depressions. Silvio Gesell lived around 1900. Interest rates below zero weren’t possible because of the gold standard. Depositors could go to the bank and withdraw their deposits in gold so that they didn’t have to accept negative interest rates. From time to time there were bank runs, economic crises and wars that destroyed a lot of capital. And this created new room for growth.

There may be a relationship between interest, economic depressions and war. In 1910 the amount of capital income (the red circle in the graph) relative to total income (the two circles together) was close to what it was in 2010. This could have led to an economic depression but then came World War I. The war destroyed a lot of capital so that there was new room for capital growth and interest rates could remain positive.

A few decades later the Great Depression arrived. If interest rates could have gone below zero in the 1930s, the Great Depression might not have happened, Adolf Hitler would not have risen to power and World War II would not have occurred. The currency of Wörgl demonstrates that negative interest rates could have ended the depression. After World War II interest rates never came near zero again. Governments and central banks printed more money. This caused inflation, which eroded trust in money.

People feared that inflation would make their money worth less so interest rates rose. In the 1970s the link between money and gold was abandoned because there was a lot more money than there was gold to back it. In the 1980s governments and central banks started policies to bring down inflation and to promote trust in money. As of 1983 interest rates went down gradually as a consequence of a renewed trust in money and central banks. Debt levels rose and interest rates went near zero.

Promoting inflation might not be a good idea. The end result is unpredictable. The best one can hope for is a poor performing economy and a lot of inflation like in the 1970s. But if interest rates rise because lenders lose their trust in money and debts, people may not be able to repay their debts, and the financial system might get into serious trouble. This can cause another great depression or another great war. But if the alternative is negative interest rates, stability and prosperity, then why not opt for that?
eou_31_questions

Featured image: Of Usury, from Brant’s Stultifera Navis (the Ship of Fools). Albrecht Dürer (1494). Public domain.