How is the global perpetual debt based economy sustainable.

Question

So, currencies are debt notes. Central banks create money by loaning money to banks, ergo creating debt rather than money in a way.

This is why we can never get rid of inflation, only control it. This is why national debts keep rising. From what I’ve gather deflation is much worse than high inflation.

So if the debt keeps building up, is the whole global economy not just a ticking time bomb that will need to implode?
If not, how does it stay sustainable.

In: 1

Answer 1

No, the central bank does not create money by simply lending it to banks. They create it out of thin air. It’s called inflation. New debt is created by the treasury by issuing new bonds to investors, which can be banks.