1. Unrepayable debt Loans are made with interest charges attached, and because of the compounding of interest on interest are paid back many times over the initial amount.� although the supply of money is not sufficient for all people to repay all of the debts.� Some people win and many people lose, most third world countries are unlikely to ever repay their debt.
2. Permanent scarcity Money is also created through loans with interest charges attached, and thus has a tendency to flow back to where it was created in order to repay the debts.� This causes a permanent shortage of money, meaning that those who need money to finance their economic activities are kept out of the economy. Although there are opportunities to exchange locally-produced goods and services for local consumption between people in a community, there is not enough money to facilitate all of the possible exchange.� Competition around the shortage of money leads to unnecessary competition and the mutually-assured collapses of local businesses.� In time, economic deserts of monetary scarcity arise in which the local economy barely functions. Disorganization and lack of co-operation and specialization caused by the lack of a sufficient supply of means of exchange is the consequence of this process.� National currencies must be kept scarce in order to maintain the value of the currency on international markets, reducing local economic activity.� Family members are forced to migrate from rural to urban areas in the search for money.
3. Cultural and social degradation From a lack of opportunities to exchange, to a retardation of the development of a community and its members, and a resulting degradation of society and culture.� Traditions and cultures are set aside so that maximum effort can be focused on accessing money, as communities become indebted to entities outside of the community.
4. Higher consumer prices The payment of interest is a tax on consumers and the poor because interest charges are factored into the cost of goods. Interest costs are factored into consumer prices, leading to higher prices which put local industries at a disadvantage against external businesses who can borrow at lower rates of interest.� Interest rates in the south are generally high because of the scarcity of money, interest rates in the north are low because money is less scarce.� In the rich countries, approximately 25% of the price of goods goes to pay the interest on the money borrowed to purchase them, in the third world this can rise to 75% of the price of goods.
5. Imbalance of international capital exchange As seen in the previous example, poor countries pay more money to service interest payments on their imports than they receive as income through their exports, which ends up being a form of development aid for the countries that are already wealthy, as they earn back many times more than they have lent to the poor countries.
6. Discourages beneficial economic activities, encourages harmful economic activities The charging of interest discourages investments in activities that are sustainable because they are not sufficiently profitable to repay the interest on the investment.� Investment is directed into activities with short-term returns, which in the third world means monetizing natural capital without regard for future consequences.� Money that is based on debt does not provide incentives for people to spend their money in a way which will keep the money circulating locally longer and return to them as producers.� So it is from a financial point of view much cheaper to cut down a tropical forest and invest the money than it is to make sustainable use of the tropical forest.
7. Speculation, not production, is encouraged Money earns greater profit if it is used for speculation that if it is used for the exchange of goods and services at the local level.� More than once money speculation has destroyed economies and driven thousands and millions of people into poverty.� Interest forces borrowers to not consider the best economic decision, but the best financial decision.
8. Puts the community market at a disadvantage in competition with the global market. The market does not provide any advantage to the local economy, rather giving many advantages to the global economy.� The market does not give signals to consumers about how their buying choices can benefit, or harm the local economy.� Consumers can unknowingly betray their local economy by purchasing goods which may be cheaper, but come from non-local suppliers. Factories that can produce goods at a reasonable cost, but still less than the interest charges they must repay go bankrupt.
9. Promotes corruption The redistribution of interest back into an economy through investments go through concentrated channels, providing many opportunities for large-scale corruption by those who control these channels, providing bad examples for those who are lower down the chain.