this post was submitted on 25 Dec 2024
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If you think that's bad, imagine for a moment that they are the only money in the whole system, then charge interest on the loans, and then fast forward to a time when all the loans resolve and everyone is paid back. It's actually impossible, because there's not enough money in the whole system to both pay back the loans and charge interest. You have to print money to make the system keep working, but doing so devalues the currency. To cover the loss of value, prices go up to compensate (inflation).
If you haven't had a chance to read Harari's Sapiens (and his other books, all great) I highly recommend it. He talks about the banking system and goes into detail on the concept of shared fiction. The idea that we live in multiple realities, the one where the lion eats you being the physical one, but also the one where all the stuff we have made up exists, which can also eat you.
The bit where he compares a priest waving his arms and poof god exists to a lawyer, waving his arms and poof a corporation exists is perhaps my favorite.