Lucrative Financial Activities and Their Close Relation to the Solvency of Society

Kozo Mayumi () and Ansel Renner ()
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Ansel Renner: Autonomous University of Barcelona

Chapter Chapter 4 in Reconsidering the Privileged Powers of Banks, 2023, pp 67-95 from Springer

Abstract: Abstract This chapter interrogates money's unnatural ability to increase in tune with positive interest—an alluring practice to economic and political structures striving to control money issuance. Key theories such as the Macleod–Soddy–Allais (MSA) relation summarize the institutionalized dynamics allowing the creation of two money units from nothing, exacerbating financial instability and instigating asset bubbles. An alternate loan redemption model, inspired by Soddy, proposes to slash debt while still generating interest. Empirical analysis of the balance sheets of Sony and Toyota demonstrates the financialization of the so-called “manufacturing industry,” most recently and emphatically under Japan's quantitative easing policy. Further, the chapter describes societal paradoxes stemming from the two unnatural powers given to commercial banks, emphasizing the iron grip the banking sector has on money supply and consequent solvency challenges. It suggests an urgent need for a well-through-out sovereign money system designed to mitigate the several financial burdens felt by modernity.

Keywords: Money issuance; Interest; Financialization; Quantitative easing; Loan redemption (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-6058-3_4

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DOI: 10.1007/978-981-99-6058-3_4

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