Showing posts with label Interest. Show all posts
Showing posts with label Interest. Show all posts

Monday, November 19, 2012

Chapter 2.2 – Freegaia

Excerpt from the book »Gradido – Natural Economy of Life«

We approached a solar system and soon it was floating in front of us - Freegaia, a wonderful blue planet, quite similar to our earth. We gently dived into the atmosphere and landed in the middle of a magnificent park, similar to a huge garden. The plants emanated an indescribably delicious scent. Now and then a small space vehicle flitted by almost noiselessly above our heads.

But there in the middle of the plants were houses. They did not look like our houses; they fitted into their natural surroundings in such a way that from a distance they were not recognisable as houses at all. The people we encountered all greeted us in a friendly manner. They appeared to be happy. Humans and nature were living together in harmony.

“How did you manage to achieve this? Can you tell me something about your technology?”

“Technology was never a problem,“ said Very. “The problem that needed to be solved lay in the inhabitants’ thinking and in the economy. Because their way of thinking focused on scarcity our ancestors had thought out an economic system marked by competition. Now our life together and also our economy is characterised by abundance, wealth and love of nature and everything that exists.”

Very gave me a short outline of the history of his planet


“Quite a long time ago some robbing and murdering carnivores – Romucas – increasingly took over power by killing weaker people and depriving them of their livelihood through the force of their martial superiority. To prevent the Romucas eating themselves up, huge books of laws regulating every little thing were written. For the Romucas’ intelligence und ethics were not sufficient for a peaceful life together. In these books of laws there were instructions such as »You shall not kill«. The Romucas had to be explicitly told this! During the Romucas’ raids these laws were either suspended or their opponents were defined as “wild people” who needed to be missionized or exterminated. After their raids the Romucas introduced the same Romuca law for everybody. In this way stability was created and the new power structure was cemented.

The Romucas’ main illusion was their thinking based on scarcity. Seemingly there wasn’t enough there for everybody. So their favourite occupation was fighting or competition. There had to be winners and losers. As killing was forbidden and most of the “wild people” had already been killed or missionized anyway, ambitious Romucas shifted their activities to other fields, such as the economy, sport and games. In sport and games they were able to live out their competition in a relatively harmless way. In the economy, on the other hand, Romucaism led to more and more social injustice. The gap between poor and rich became greater and greater.

On Freegaia there had always been people who observed nature and sought to fathom its laws.
In early times these people had been burnt as heretics. But later when they let their knowledge be used for military purposes they were called scientists. Observers of nature who did not make any discoveries useful to the military were called charlatans and subjected to ridicule.

Over time the climate become more liberal and more and more nations converted to democracy. Shortly before the beginning of the New Age the observations of the scientists and charlatans started to correlate more and more. Analogies were found between natural sciences, philosophy and religions. People started to translate this knowledge to politics and economics. 

Comparison of the economy and nature


Nature produces food from herself and gives it to her living creatures. When nature is in order, abundance prevails, i.e. there is more food available than is needed. Food is perishable and can only be stored for a certain amount of time.

In nature there are no debts and no interest is charged. That’s why it doesn’t occur to plants and animals to hoard more than they need. Because of that there are no  »rich« and »poor« plants or animals.

And another thing: whether and how hard animals work for their food is very different from one form of life to another. Every animal living in the wild behaves in accordance with its nature. If you want an animal in captivity to work, you have to goad it all the time. No animal would fight for a »right to work«.

At that time people didn’t receive any basic income. Although the governments required their citizens to pay tax, they had such a big shortage of money that they had to borrow again and again each year. Great attention was paid to monetary stability but they seldom managed to achieve this. Money was created from debt and there was a system of charging interest. Both the assets and the debts got higher and higher. The citizens did all they could to accumulate money. The rich got richer and richer and the poor got poorer and poorer.

As far as work was concerned, most people did similar work, which was rarely in harmony with their natures. Although they disliked doing these jobs so alien to their natures, they had previously fought hard for the right to work. In spite of this right, large parts of the population were unemployed. On the other side, there was a surplus of goods and services.

The economy behaved in a way exactly contrary to nature. So we had to reverse our economic practice and bring it into harmony with nature. This realisation was the key to worldwide prosperity.

We thus developed our new economic model that today is practised on the entire planet and brings riches and happiness to all those involved: it is the Natural Economy of Life.”


Wednesday, October 17, 2012

Chapter 3.4 – No creation of money through debt

Excerpt from the book »Gradido – Natural Economy of Life« 

»In nature there are no debts and no interest is charged. That’s why it doesn’t occur to plants and animals to hoard more than they need. Because of that there are no  »rich« and »poor« plants or animals«.    
– Joytopia

Have you ever wondered where money actually comes from? How was it created? Does it simply come from the cash dispenser like electricity from the socket? Did a creator make it in some prehistoric time as God created the world? And who created the debts?

There is a touch of mysticism about money. And so it is no wonder that only very few people know how money is created. »Money creation« is a term from the world of finance. It describes the process by which money comes into being. And indeed it is now something mystical since today’s money is often called fiat money. This has nothing to do with the car make of the same name but refers to the Bible: in Genesis, the first book of the Bible, God said in Latin »Fiat lux!«, which means »Let there be light!«. And there was light, as we learnt in our religious instruction lessons. Today’s creator gods say »Fiat money!«, or »Let there be money!« And they create money from borrowing or debt.

Fiat money signifies »money from nothing«. A small part of it is created by the central banks and the greatest part by the commercial banks. In the bank balance sheet the total of all accounts has to be »zero«. Expressed differently, the total credit balances have to be equal to the total debts.

How does the creation of money from nothing work? Imagine that you and I both have a zero amount of euros on our bank accounts. We have absolutely no money at all. Although neither of us has any money, you buy books from me to give to your friends because you would like to pass on the valuable knowledge about the Natural Economy of Life. As you are an honest person, you transfer a hundred euros to my account. I am now the happy owner of a credit balance of one hundred euros: and you unfortunately have a debt of one hundred euros to the bank.

What has just happened? Money was created from nothing – through debt! Inside the bank the procedure is in fact slightly more complex but for us »non-bankers« (that’s what banks call people like you and me) only what goes in and what goes out counts. Nothing goes in and assets and debts come out.

Who has created the money then? The central bank? Its bank director? The friendly bank clerk who looks after your current account? The bank computer? The answer is hard but clear: you have created money, thus burdening yourself with debt. You wanted to do something good, support a project, inform your friends, make the world a bit better and in doing so have got yourself into debt!

»Yes, but only because I didn’t have any money. You should only spend what you have.« This – or something similar – is what you may be thinking now. But can this rule be kept at all in a system where money is created through debt? For every credit in euros there has to be a debit somewhere else. If you have no debt someone else has. There is no other possibility in our system. So that it does not come to people’s attention our governments have assumed the debts on behalf of their citizens. In Germany that currently makes 20,000 euros in government debt per person. Virtually all nations worldwide have enormous debts and many of them are on the verge of bankruptcy.

Such a system cannot function at all – least of all when we consider the threefold good for there it fails on all three levels. The good of the individual is diminished since you either have debts or have helped to create other people’s debts. The good of the community is at risk on account of the high government debts with the risk of state bankruptcy. Today the entire international community is affected. And finally the good of the big scheme of things is negatively impacted since highly competitive markets do not shrink from waging wars and destroying the environment.

A system of creating money from debt harms everybody and benefits nobody.

Interest and compound interest further aggravate the problem. But even interest-free monetary systems have the harmful impact described. Well-meaning alternative monetary systems, such as barter clubs and exchanges, LETS systems and suchlike are also included in this category. Regional currencies, which are tied to the national currency, cannot be considered as solutions for this very reason.


»It is beyond doubt that the good is always the bad that you cease to do«.

– Wilhelm Busch
German humorist, poet and graphic artist


In the following sections you will get to know a monetary and economic model which does not create money from debt but from life itself. It is constructed in such a way that everyone benefits and nobody is harmed.

And it is based on a principle which should be a matter of course for a civilised species…

Friday, September 7, 2012

Advantage 14 – A merciful system forgives mistakes

Excerpt from the book »Gradido – Natural Economy of Life«


»Justice only exists in hell; in heaven there is mercy.«
– Gertrud von Le Fort
German poet

Gentle transience saves us from damage when we make mistakes. A person who makes a mistake in business may possibly have to pay for it their whole life long. For the repercussions of the mistake increase from year to year because of interest and compound interest.

In contrast to this, the gradido is a merciful system. Transience makes the mistakes only »half as bad« after one year. It lets the »grass grow over them«. And after a further year you will scarcely notice anything any longer.

How many promising business ideas often fail today in the very first few years because they could not be financed well? And how many once successful firms have to give up? The large part of these bankruptcies would be unnecessary if we did not have such an uncompromising economic system.

There will hardly be any bankruptcies in the Natural Economy of Life. First of all, people will have more liquid money and secondly, mistakes can be coped with much more easily without the existence of the business immediately being called into question.

Wednesday, August 1, 2012

Advantage 40 – Only interest-free loans have a chance on the market

Excerpt from the book »Gradido – Natural Economy of Life«

»The sin called “usura“ (charging interest), which has its actual origin in the loan contract, consists of demanding back more from the borrower than the amount he received. [... ] Any profit that exceeds the borrowed sum is therefore not permitted and usurious.«
– Pope Benedict XIV
Encyclica of 1 November 1745

Charging interest and compound interest is prohibited both in Christianity and Islam. But how effective is this prohibition?

The Natural Economy of Life manages without a ban on interest as money is plentifully available and subject to planned decay. The number of loans on offer will be very high as people will try to preserve the value of their money. The advantages for the lender are still great even with an interest-free loan: if the money is not lent, half the amount will be gone within a year because of the built-in perishability. After two years only a quarter of the original amount will be left and after three years only an eighth. So in any case it is better to make a loan than to keep the money in an account. That applies to everyone who earns more than they spend.

Interest would have no chance on this market. Loans with negative interest are much more likely: it is still better to have 80% left instead of all your money being gone after ten years.

Tuesday, July 17, 2012

Advantage 44 – No interest hidden in prices

Excerpt from the book »Gradido – Natural Economy of Life«

»All the costs accumulated in the production and pricing phases go into the end price. These have to be borne by the households directly or indirectly in their expenditure, since they are the last in the chain and can no longer pass on the costs.«

– Helmut Creutz
German economic analyst and publisher

At the present time interest, taxes and other levies have to be included in product pricing. This either increases prices or leads to merciless cut-throat competition that only big discount shops can survive. This is evident on all levels at the present time. 

In the Natural Economy of Life loans are normally interest-free. Hence, no hidden interest has to be included in product pricing. Prices are fair again and competition between discounters and small suppliers subsides. 

Monday, July 16, 2012

Advantage 45 – Win-win situation for lenders and borrowers

Excerpt from the book »Gradido – Natural Economy of Life«

»We believe that economics does not necessarily have to be a zero-sum game; it can be a win-win proposition for everyone involved so long as they have the tools in which to succeed.«
– Ron Kind
American politician

We have already written about the advantages for the lender, who can save the value of their money by making a loan. These advantages are so great that there may possibly even be negative interest for loans.

And now we come to the advantages for the borrower. Anyone who has to build a house with borrowed money may, under certain circumstances, have to repay the threefold amount in the course of the years. The longer the duration of the loan, the more the borrower has to pay back.

In the Natural Economy of Life it is completely different. The maximal amount a borrower has to pay back is the amount of the loan. Both parties – lender and borrower – thus enjoy great advantages from the loan and the result is a real win-win situation.