Abstract
Today’s monetary system, characterized by fractional-reserve-banking and currencies that are not backed by a physicalcommodity, has obvious shortcomings. In fact, the economies are caught in a trap: To support short-term economic growth, central banks tend to set their target rates too low and governments tend to spend too much. As a consequence, unsustainable debt levels build up and lead to severe financial crises, which in turn provoke further stimulus. However, such stimulus increasingly loses its effectiveness, even in the short term.
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