In general, the person that lends out Money will ask interest payment. In the modern economy, bank credit creates money in the form of debt, while repaying debt destroys money. 1 While the debt money is created, the interest that needs to be payed for the service is not. Some propose that it is impossible to pay that interest without someone (else) taking on more debt first. However, by considering money as a flow in a micro-scale closed system, it is easily shown that debt plus interest can be payed back without any problem in most cases. It is explored here what is necessary to “close” the debt and how time and interaction between this type of systems affects the flow and the behavior of money.
There are many kinds of Money but not all of them are legal tender or currency. Then we have central banks and fiat, gold-standard or debt-Money. How come that all countries have huge debts, but also most households? Who owns that debt? This page describes the basics that can be used for analysis or a good discussion.
Are all masters curricula at universities scientific? Is something likely because it follows from solid reasoning based upon previous research or just because some authority says so? And what makes something or someone an authority? Is it solid research or many references in prestigious journals? Which boils down to authority again, as what makes these journals prestigious? Is it because the majority of the research that it publishes can be reproduced well and withstand many attempts to falsify them? But that is also true when both the particular journal and the community stay safely within the limits of the mainstream and never put the fundamentals of that mainstream to actual scrutiny. In that case, the community will not leave the mainstream as that means no or less prestigious publication, which means less income. In that case, the community is locked in. Which scientific communities are locked in? Why am I asking these question?
A lot of textbooks explain that a bank lends out money from savings. This is not how banking works in reality. As most people associate “savings” strictly with “money in savings accounts”, the explanation is even misleading. However, as the model can be used to describe some interesting properties and can function as a basis for alternative models for banking, I added the textbook example anyway. Fortunately, there are also excellent papers that explain how banks do work. 1 This page tries to explain the story in a slightly different way, with less slang if possible. And it will also pinpoint some interesting, inherent problems of the current banking and money system. Where possibe, necessary, the economy lives on a far away and isolated island, yet without violating reality.