Drawbacks of our monetary system and economy

Up to now, the vast majority of new currency entered the economy via loans — This includes loans made by private banks to individuals and also loans made by reserve banks to governments (E.g. for spending on government salaries and contracts). On the other hand, currency is removed from the economy primarily via loan repayments.

Since loan repayments carry additional interest and sum up to a number which is greater than what was originally loaned, it is necessary that reserve banks and private banks inject a constant flow of new, increasingly large loans into the economy to offset the deflation caused by the ongoing repayment of past loans[1]; the constant inflow of new loans allows each generation of borrowers to pay off their personal debts using new credit taken out by the next generation of borrowers. Although this system may allow individuals to fully pay off their personal debts after some time, debt as a whole never goes away; it is merely transferred from one generation to the next and it keeps getting bigger over time.

Since 2008, however, the Federal Reserve Bank of the United States (among others) introduced two new mechanisms to inject new money into the economy without simultaneously creating new debt; the most publicized one was Quantitative Easing (QE); it allowed the Fed to create new money and use it to buy assets (e.g. toxic…