More Debt than Money:
The impossible contract.
by Andrew Chalkley 2016
The imperfect nature of money is easy to see when you consider the ways we use money:
- Money is prone to hoarding by people with more than they can spend. They steal it from the circulation like removing the balls from a pool table, mugs from the tearoom or the coins from the carwash.
- It can be stolen.
- It can be counterfeit.
- It can be monopolized.
- It can be lent. People with more than they need, may lend it to those that need money tokens for some reason. If the borrower is required to pay back more than they borrowed, it is possible to have more owing than there is tokens.
- Substitutes can be created by writing on a certificate: “I owe the bearer of this certificate one token” and “collect it anytime you want!”. Yet the lender may not have the token that that the certificate represents. The token supply has effectively increased by the number of unbacked certificates.
- If the volume of substitute tokens is high and they are lent into society at say 10% interest, it is easy to have more debt than money. If there are 100 tokens and 100 certificates, within eight years there will be over 200 tokens owing to the certificate issuers. In thirty years there will be 1744 tokens owing to the certificate issuers, yet there is only 100 tokens and 100 certificates in circulation. Yet the naughty certificate issuers never had the tokens that backed the certificates in the first place. The money system is no longer functioning for the benefit of society. The certificate issuers have bought the land, assets and politicians.
- The system is collapse-prone. If trust in the tokens evaporates, the people revert to barter.
- If money is hoarded, it can all come out of hiding in one day and flood the system causing loss of confidence.
More Debt than Money
When I explain the logic of money to people, I first demonstrate that it is possible to have More Debt than Money. Initially, people find this difficult to accept. I get some seriously puzzled faces when I demonstrate this mystifying phenomenon. I could not believe it myself when I first discovered the situation, so I worked on numerous ways to confirm to myself that this was truly the case. I give three examples and then a graphical representation to demonstrate that there can be More Debt than Money.
My first example:
Imagine the time when gold was money. Imagine all the gold in the world. Imagine all the gold in the world is lent out by those that hold the gold. Interest is payable at 10%, in gold. At the end of the year, how is it possible to pay the interest? How can you pay back more gold, than there is gold? The interest has done something very strange, it has created unpayable debt! Money has created unpayable money. The process of expecting more in return than was lent is called Usury.
The next example:
Consider all the money in the world that has been created by the central banks of all the nations of the world and imagine that all the money is lent out at 10%. How can the interest be paid? How can we pay back more money than there is money? The banks want more money than all the money. This Usury is a major feature of our money system. Our modern money system creates More Debt than Money. Our money system creates more debt than can be repaid with the money in circulation. The creditors want more money than all the money that exists.
My third example:
There are ten people in a room that represent the people of our nation. You are one of them. I am a bank and I will lend each of you one hundred money tokens which we shall call dollars. The interest rate is 10%. You may trade with each other, build each other houses, and carry out regular business.
It is now the end of the year and I want my money back and you each owe me $110. If you cannot pay, you can give me your real assets. In days gone by, this would have included enforced servitude or even your wives and daughters taken as concubines.
This, clearly, will not work. So the first thing we learn is that it is possible to have More Debt than Money. More Debt than Money means that the debts are unpayable. If the debts are unpayable, then an Impossible Contract has been created. If this Unpayable Debt is an Impossible Contract, is the debt legal? I don’t have an answer to the legality of Impossible Contracts, but they appear to be very common. I call this: