Central Banking is built on a system of perpetual debt, and is the bane of all of the working class, which is exploited for the (often temporary) gain of the rich.
Imagine this scenario: if a central bank had $100, and loaned out $25 to 4 banks each, but with $2 added to each loan as interests, there is still only $100 in circulation, but $110 in debt. Each bank would have to repay $22 to the cental bank, and there is simply not enough currency in circulation for that to happen.
In order to make up the interest, the banks loan out smaller loans of $5 to 5 individuals, but with an added $1 interest, meaning each person will have to pay back $6. This would give each bank $30, enough to pay back the $22 to the central bank, while reaping an $8 profit for themselves. But $6 times 5 people, times 4 banks is $120, and there is simply not enough currency in circulation to eliminate all the debt. Eventually more is loaned out by the central bank so that some people may pay their loans off, but simultaneously putting more people further in debt, while also decreasing the value of the money itself (which means bigger loans, higher interest, more debt, etc).
There are some ways to alleviate the enormous debt that is created via central banking, two of the most prominent are a return to some kind of backed currency, and a system of mutual banking. A backed currency could reduce the inflation that drives the debt brought on by fiat currency, but without equal access to the materials themselves (like gold), paper money that represents it would continue to get loaned out, still pushing an, of course slowed, cycle of debt. Mutual banks as proposed by Proudhon and other Mutualist thinkers have a similar problem, regardless if the currency is fiat, backed, or based on some kind of labour-voucher system. Although these proposed mutual banks would loan out money at (much) lower interest rates, the interest itself is the problem. No matter if the total cost of interest is a penny, the total debt would still be greater than then the amount of currency in circulation, and this is as big of a theft as inflation itself.
And this is the blessing of Bitcoin and other similar blockchain based crypto-currencies. These currencies are not controlled by a bank, so introduction of money into circulation is not done by loaning it out, but rather by “miners” solving cryptographic problems, and being rewarded with the money. The miners then spend the money they have been rewarded with, putting it directly into circulation with no interest, and therefore no debt, being attached to it. As for inflation, there is already a set rate of introduction of new coins, rather than some random rate introduced by central banks, so value can be adjusted as soon as the project itself is launched.
This doesn’t mean that loans wouldn’t ever be used even if bitcoin or similar currencies became the norm, because sometimes they are an important aspect of any money-based economy (such as with College Tuition, Housing Loans, etc) , but rather that introduction/creation of the money wouldn’t establish a system of perpetual debt, keeping the poor in poverty. Bitcoin would allow equality of opportunity, and a more egalitarian economy.
More debt. more interest... thats just how it works
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