Why Do We Need Monetary Innovation?
Three common Misconceptions Three threatening Results Three possible Solutions
Margrit Kennedy, 2005
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In this lecture I will pursue the question: Why do we need monetary innovation?” Firstly, I will describe three misconceptions most people hold about money; secondly I will explain three results of these misconceptions, and thirdly offer three possible solutions in terms of monetary
What is money? Let’s take the good news first. Money is one of the most ingenious inventions of humankind. It helps the exchange of goods and services and overcomes the limitations of barter, thereby creating the possibility of specialization, which is the basis of civilization. Why then
do we have a money problem?
Here is the bad news. Throughout most of history, the circulation of money has been based on the payment of interest. Interest leads to compound interest. Compound interest leads to exponential growth. And exponential
growth in turn is unsustainable. Therefore, in order to understand how our monetary system works as an‘invisible wrecking machine’ since its inception, it is useful to understand three basic misconceptions about money which
almost everybody holds.
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