A collapse of the global system is inevitable… it is merely a question of when. Only then will those in power be faced with no other option but to accept the truth of their foolishness in propping up a system at the behest of the ‘1%’ as against the ‘99%’.
Before we start, to demonstrate the folly of the current ‘solutions’ offered, let me present a simple chart. As they say, a picture speaks a thousand words. I trust the chart below is evidence enough, and requires little explanation, if any...
...so just HOW is it envisaged that raising the debt ceiling to $16bn will help in reducing or re-paying off the exponential increase in debt, which has doubled in the last five years alone? In reality, the truth is that the current ‘strategies’ are nothing more than delaying tactics… passing the debt from private institutions onto governments (and further increasing it in the process), and hence on to the ordinary taxpayers; as well as deferring it to future generations, allowing those pulling the strings to extract further wealth before the inevitable occurs. So, the WEALTHIEST (allegedly) country on the earth (USA in the chart above) is also the most INDEBTED... just how does that work?
So… where do we start? At the beginning… which is the actual root of the problem - the proliferation of the man-made systems in place. But for those who would like a more detailed expose, I would suggest the beginning is interest. So let us take a closer look...
So what exactly is interest, or usury, to use the original religious terminology? Quite simply, interest is charging money for money. On the face of it, we may think it is quite right to charge someone for access to capital. In the same way we sell our ‘labour’ when we go to work, or charge a rental for the use of land or equipment, surely capital has a price too?
Historically, the charging of interest has always been viewed as immoral. It is condemned in all traditional religious texts. Christians viewed partaking in interest as equal to heresy; individuals accepting loans on interest were to be denied the sacraments, and even a Christian burial. Taking of interest was viewed as equal to murder. This is in stark contrast to how interest is viewed more recently, as integral to the functioning of a modern economy. So how did the idea of interest become acceptable over time?
Money was initially viewed as a store of wealth, or a means by which wealth could be exchanged, rather than a means of production itself. Lending was seen as an act of kindness, by sharing the wealth that God had bestowed on those more fortunate with those who had less, rather than hoarding it. Essentially, lenders were those who had surplus wealth, and were in a position to lend to those in need, either for daily sustenance or to try and improve their own means of livelihood. However, the concept of charging a price for borrowing money has always been viewed as motivated by greed, and unjust profiteering.
Jewish tradition has generally barred the practice of charging interest between Israelites themselves, but allowed it in dealings with non-Israelites. In this context, for those Christians who wished to borrow money for commercial purposes, they found willing lenders within the Jewish communities. The ostracisation of Jews from many occupations saw them become more prominent in activities viewed with disdain, such as rent collection, pawn broking and money lending.
A weakening religious code in society always left the door ajar for lending at lower rates of interest, which although frowned upon in Britain and Europe, was still practised. As its acceptability increased, the term ‘usurious interest’ arose, to reflect charging a usurious level if interest, i.e. at a rate deemed to be excessive and burdensome for the borrower. The concept of an acceptable level of interest (seen as morally justified or lawful), aside from usury (seen as immoral) also gained ground.
Whereas traditional lending was conducted by wealthy individuals and not institutions, this began to change in the middle and latter part of the last century. The rejection and expulsion of Jewish communities from many parts of northern Europe led them to establish roots (and networks) in many different European cities. This network of contacts became stronger, and the modern banks are a legacy of those first Jewish families who started out as money-lenders. The wider expulsion of Jews from Europe left a gap which Christian merchants were able to fill.
The services provided by these early banks expanded – the benefits of lending at interest encouraged them to actively seek deposits of wealth, these typically being valuable coinage of gold or silver. Institutions provided the depositors with notes of promises to pay on demand (this is still seen on notes issued today). As the reputation of these money lending institutions grew, depositors rarely withdrew their metals in full, and people began exchanging the notes between themselves. Realising this, these early banks realised they were able to lend out ‘promises to pay’ in excess of the deposits they received.
This had a number of consequences, two of which are detailed below.
Firstly, this brought about the beginning of ‘debt’, as borrowers were encouraged to borrow more as credit increased.
Secondly, banks themselves began depositing wealth with other banks, in order to make further profits in the form of interest. Recipients of these deposits would do likewise, depositing with other banks, and lending to governments, hence creating a web of lending and more lending, creating debt and interest in the process.
In the light of these events, we can better understand the situation we face today. The chart below demonstrates this money ‘merry-go-round’ that exists simply due to lending, which itself exists due to the idea of profiting from interest.
These charts and more can be accessed by simply clicking on them, and aptly demonstrate how the debt is simply owed and owned by countries (banks, governments, investment funds etc) between themselves.
The next article in this series will demonstrate how an interest free economy would function to avoid the problems faced in the debt and interest ridden economies we live in today.
By Hamid Chaudry
Bayyina Foundation
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