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The Economic Crisis

“The theories men construct, and the words in which they are framed, often influence their mind more strongly than the facts presented by reality.”

Röpke (1899–1966), German economist.

The current economic order is based on a socialist foundation in the form of a government-monopolized, legally prescribed currency and a centrally planned economic system of dictated interest rates through the central bank of a nation. It functions like this: First debt is incurred. Then, through distortion, this debt takes on the guise of paper money. Because the paper money is not backed by anything of value, however, these pieces of paper are effectively worthless. But since the government stipulates that paper bills shall be recognized as legal tender for private and public debt, it generates artificial demand for something that no one would accept as money (= main means of exchange) if they were not forced to do so.

Imagine the repayment of all the debt in the world. This would mean that not one piece of “paper money” would continue to circulate in the economic system.

Due to the interest on debt, this system is subject to exponential growth. This means that over a long period, the debt rises moderately at first and eventually experiences massive acceleration.


The diagram above shows how exponential growth (green) overtakes both linear growth (red) and cubic growth (blue).

  •  Exponential growth
  •  Linear growth
  •  Cubic growth

We are currently at a position between 9 and 10 in the above diagram. This is the reason why the entire system must be flooded with thousands of billions. Ultimately this means that debt is being combated through the issue of ever more debt!

Claudio Grass
Student of Ferdinand Lips
and proponent of the Austrian School of Economics


The role of debt
The role of money
The role of confidence
The role of the USA
The role of US debt