Interest generation devalues currencies... because?? because I say so!!!!

Well, it’s not for that reason.

What happens is that money is just paper, metal or data inside a computer, but it takes its value from the production and exchange of a product.

Every time something is made and exchanged for money, the currency acquires value. Let’s say you plant a carrot, go to the market and exchange the carrot for some coins. The coins you receive are not just metal, now they possess the value of the carrot you exchanged, the value of your work to obtain it, and the value of your time invested in the trade.

Thus, every time a coin is exchanged, its value increases, and all commercial operations carried out within a country using its currency increase the value of that currency.

But now let’s say you take out a loan from a bank, the loan becomes a debt. This debt will generate interest, which means that, automatically, the money is multiplying.

Since the total value of money comes from trade, the less money there is or the more trade there is, the greater the value of the currency.

But the generation of interest causes the existing amount of money to grow, without growing trade, thus devaluing the currency.

In other words, each loan issued in a particular currency impoverishes all holders of that currency, not just the one who requested or issued the loan. If a country grants a large amount of credit but does not improve production and trade, the currency will devalue faster than a virgin on her first night.