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Figure 3 Examples of the Amount of Interest Within Normal Prices & Fees The solution to the problems caused by present exponential growth is to create a money system which follows the natural growth curve. That requires the replacement of interest by another mechanism to keep money in circulation. This will be discussed in detail in Chapter 2.

Second Misconception: WE PAY INTEREST ONLY IF WE BORROW MONEY A further reason why it is difficult for us to understand the full impact of the interest mechanism on our monetary system is that it works in a concealed way. Thus the second common misconception is that we pay interest only when we borrow money, and, if we want to avoid paying interest, all we need to do is avoid borrowing money. Figure 3 shows that this is not true because interest is included in every price we pay. The exact amount varies according to the labour versus capital costs of the goods and services we buy. Some examples indicate the difference clearly. The capital share in garbage collection amounts to 12 % because here the share of capital costs is relatively low and the share of physical labour is particularly high. This changes in the provision of drinking water, where capital costs amount to 38 %, and even more so in social housing, where they add up to 77 %. On an

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Margit Kennedy (!) - Interest and Inflation Free Money  

Copyright 1995 by Margrit Kennedy) (Published by Seva International; ISBN 0-9643025-0-0; 1 2 LIST OF FIGURES:..................................

Margit Kennedy (!) - Interest and Inflation Free Money  

Copyright 1995 by Margrit Kennedy) (Published by Seva International; ISBN 0-9643025-0-0; 1 2 LIST OF FIGURES:..................................

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