IF A MONEYLENDER from the time of Christ had loaned an ounce of gold at 5% annual compound interest, it would today require an amount of bullion weighing several planet Earths in repayment. Early bankers knew the profound implications of this fact: a system in which commodity money is loaned out at interest is physically unsustainable.
With paper money things are different. When the exponents begin their inevitable work, the issuer of such money can simply print a larger face-value on the banknotes. In acquiring the legal privilege to create money in this way, early banks side-stepped a critical ...
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