Tag Archives: Debt

Interest, Inequality & Environmental Destruction

Presentation given by Clive Menzies at the first meeting of the Money Alternatives Project on Saturday 3rd January 2015 – link to power-point slides.
Clive opened by posing the question “How do people rule?”
Interest, (also Land, Citizens Income)
Its the mechanism of how we create money that is a significant problem. This is to explain why.
Margaret Kennedy wrote a book on interest and interest-free money. Inflation.
1. Everyone pays interest
2. Interest doesn’t treat everyone equally
3. Interest drives exponential debt growth, causes inflation, mutually caused
West Germany 1982, data – first 8 deciles shows the poor are paying interest to the rich. We are pushing water uphill. This illustrates that interest is one of the major drivers of inequality.
4. There’s a correlation between interest and exponential growth. The debt interest grows faster than our ability to service it. 3% GDP means that the economy has to double every 24 years.
Eg example of the wheat crop.  Looking at the curves in nature in nature it levels off. Exponential growth is like cancer.
Discounting cash-flow, everything is valued on discounted cash-flow, so we are discounting the future. If you owned a forest, you decide whether to cut them down and get the wood now or wait until the future. Every financial calculation is based on getting the cash now, to extract as quickly as possible.
Frank Ramsay in London said it’s because of a reduced time preference. Indefensible and a failure of imagination. If you based it on the future. They want the £100 quid now to invest it now. The forest, if we cu it down now its worth a million. Or at current rates of interest it might be worth x in 10 years time, discounted according to the rate of interest prevailing at the time.
Banks aren’t lending to small businesses because they can make more money on the markets. Private ownership of land incentives them to maximise the value without giving them the responsibility for protecting kit for future generations.
This comes back to the time value of money.
Another example £10 ticket, if you buy it now it’s cheaper, because of the mechanism of interest. this system has evolved over centuries, it’s so ingrained in our society that we have to make our money work for us. The idea that money needs to work for us is wholly flawed. It suggests that money of itself is capable of creating value. Not in absolute terms. Only because of the mechanism of interest.
People in the city only have the answer as it exists now.  Fundamentally it does not make sense. it’s based on capitalism, an environment where it’s necessary to compete.  There’s nothing to stop anyone connecting an entity even if you take away the option of interest. The free software movement runs the internet, but there’s never been a profit motive to create software.  This operates under a different set of rules. If you have a driverless bus, it’s going to make money, you can buy the bus, so it has to make money.

a) Interest-free national currency possibly backed by land spent into the economy by the government to create infrastructure.  b) Land rents accumulated for the common good.  c) Citizens income.

A world without interest: * Infrastructure * Private Enterprise * Housing.
Major obstacles to change are the people who benefit from interest, e.g. banking interests, and industrialists, who are people who benefit from exclusive land and resource rights, so that the means to live is conditional on employment. The new model is the Current Global Political Economy and the Ruling Clique hold the levers of power  They create division, ecocide, war, depression, they are leaching off the 7 billion people who create value on the planet, extract interest from them.

In the Critical Thinking project, they see that this is the way the world works, and can interpret everything through this model – see 45min filmed presentation by Clive Menzies via this link: Contact: info@freecriticalthinking.org.