Unlocking equity in property offers escape from Australia’s debt trap

By David James

One of the most important features of modern financial systems is rarely discussed and gets almost no attention. The failure to take it into account means there is a distorted understanding of how money is accumulated, and opportunities to prevent a systemic crisis from occurring are missed.

There are three kinds of money in capitalism systems. One is debt, or credit, which has an interest rate on it. This is produced by banks and constitutes at least 97 per cent of the money that is transacted in the system. It gets all the attention, because when the debt becomes too large, as is currently occurring in most Western economies, the system is imperilled.

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