Re: Hidden Secrets of Money

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An example of how the debt paradox is wrong: Suppose I am a fisherman and I create IOUs to buy a boat and those IOUs are used as currency. The IOUs are debt, just like the dollar, and they have interest payments. I don't have to create more debt to pay the interest because I can pay the interest with fish (or IOUs gained by selling the fish). Everything is ok as long as I don't go so far into debt that I can't pay the interest with fish. If I have to continually create more debt to pay the interest (as the U.S. is currently doing) then eventually the system will collapse.
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I see what you're doing there, but interest (I) and the load (L) have to be paid in dollars, not something else.
I have to take that out of the total money supply (S), where every dollar bears interest (apparently, don't know if this is true).
S = L < L + I
So where does the interest has to come from? Or is this way too simplistic?

Currency is reused. Suppose my interest payment to the lender is the value of a load of fish. So I go fishing and I get a load of fish. The lender (for example) buys the load with some currency and I make the interest payment with that same currency. I could potentially do this forever and there is no need for additional currency to make interest payments.

but by the logic of the debt paradox, since 95%+ of the money supply is debt money that is collecting interest, even if the currency that is involved to pay off your own interest is reused, it itself has associated interest due of some third party not mentioned in your example. if the total amount of debt is greater than the total amount of currency in circulation, then does it matter how much the actual total value of goods in the economy grows (e.g. catching additional loads of fish)?

In my example, I am the issuer of the currency. Perhaps the example was not clear. The point is that debt-based currency does not have to be created to pay interest. Interest can be paid with production. The paradox becomes real when the interest exceeds production because then the excess interest can only be paid by new debt, and a collapse is inevitable.

I think what he means is that the debt has two tiers, one at the issuance level and another at the level of economic actors. Your scenario takes place at the level of the economic actors, where debts and/or the interest on them can indeed be repaid in kind. The government is liable for the debt created at the issuance level (sovereign bonds), and both principle and interest can only be repaid in the currency they were issued in (not including fish).